Back in the beginning of December we talked about the myth of the Santa Claus Rally. You can check out the article here. Statistically, it is blip that barely offers any true predictable qualities. When you look at how often it has really occurred, it is barely better than 50% of the time. If we are flipping coins that helps, but trading stocks? Not so much.
But we are seeing a pattern that is actually repeating with very reliable consistency and could be the key to getting in on some fast moving trades.
Just about a week ago, when the market was showing signs of a possible pull back, you didn’t hear much about the Santa Claus Rally. But look at any financial news site in the last couple days and it is everywhere. It is a great, easy to consume concept and the more people talk about it them more people want to get in for this run in the last few days of the year.
This type of herd mentality is not new but it is becoming increasingly more common, and predictable. What makes it extremely attractive is when everyone over reacts and send the price of a stock way out of whack. Take a look at Microsoft in the last few days:
Ian Cooper spotted that MSFT had been beaten down and noticed a couple other key indicators. The RSI and MACD both showed it had been oversold. This created a great bargain for a quick move. Here is what he sent to his readers just yesterday:
Action to take:
Sell second half of MSFT January 21, 2022 325 calls. From an entry price of $8.35, the calls are now up to $18.10. Take the win.
Sell to close half of the MSFT January 21, 2022 332.50 calls for a win. From an entry price of $8, the calls are now up to $12.55.
Buy to open MSFT January 21, 2022 342.50 calls at market. Let’s see if we can pull even more wins from an out of the money call option.
Those are some nice grabs to wrap up the year.
Don’t believe the factors driving the Santa Claus Rally we are seeing now are limited to just one time a year. These indicators and Ian’s Trigger Points deliver presents all year round. Be sure to check it out here.
Keep learning and trade wisely,
John Boyer
Editor
Market Wealth Daily
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