Friday's trading was non committal, which was to be expected. Not only was the market closed for a very unusual 4-day weekend, but today professional money managers return from their extended vacations. Factoring these two items into the equation is not enough though. Topping off the uncertainties we face today is the fact that we start a fresh new tax season today.
Because of these uncertainties we have neutral charts pretty much across the board. It is important to stay open-minded about the immediate outlook this week. The fact is, we just don't know if the pros are going to come back today in a selling mood or if they are ready to buy. Friday's options reading was overly bearish. Moreover, the first week or two in January is generally positive. As such, we may see buying today, but evidence for either the bullish or bearish case here is pretty subjective.
If you are itchy to dive into the market after the long weekend, try to restrain that itch and take a sideline seat today. Uncertainty is not a good environment to open new trades into. The year is just beginning and there will be plenty of chances to put money to work. For today, wait and see what sets up after the long weekend. If you do, you will have a better chance of putting the probabilities in your favor.
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