Saturday, November 25, 2006
Here Comes Santa Claus
Although there is a lot of talk about a Santa Claus rally all I see are the indices rolling over and pointing down. This is expected from the INDU (DIA) of course - it has had a great run and needs a rest, but the SPY and IWM are also rolling. Where they go, generally, NASDAQ will also go.
I've been expecting an overall decline in the market for some time now (who hasn't) and wouldn't be surprised to see it slide down through December then start getting active again in January. If the last seven days are a clue there is absolutely no volatility left in this old beast at all. The VIX is signalling that the market ahead should remain largely listless. The other day (Friday) was the first sign of life the VIX has shown in a while. Of course it could go right back to sleep but I think it will start increasing here as a signal that some volatility will be coming back into the market come January.