It is very quiet out there Tuesday morning, but the early strength is generating a little profit-taking. The big question is whether we have a more aggressive bout of selling into the finish line.
A weak day at the end of the year is not unusual. In 2019 there was a drop of 0.6% on Dec. 30. In 2017, there was a drop of 0.52% on Dec. 29, and in 2016 there was a drop of 1.3% between Dec. 27 and Dec. 30. There are a number of good reasons for that sort of action, especially when we have had the sort of run we have seen over the past week.
There still is some tax-loss selling in the badly beat-up small-caps and biotechnology names, but I will be looking for bottoming action in many of these names in January. The goal is to buy when there is relative strength rather than try to guess what will be the ultimate low.
I'm doing very little at this point but may buy a few of my favorites such as Ondas Holdings (ONDS) , Alto Ingredients (ALTO) , IonQ (IONQ) , and urban-gro (UGRO) , which still seem to be impacted by tax-loss selling.
A selloff in the indexes at this point would make for a healthier market, but lots of big funds have a vested interest in keeping a few big-cap names elevated.
(Please note that due to factors including low market capitalization and/or insufficient public float, we consider many of these names to be a small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)