Strongest Seasonal Stock Market Period of the Year, but...

A part of my learning-on-the-job experience 40+ years ago came from the readings I did from the work of Norman Fosback - a real innovator of market statisticians.  He studied everything concerning its relationship to the stock market, and his calendar studies revealed a strong tendency for stocks to rally around holidays.  That plus possibly other end-of-the-year tendencies produced the analysis from Fosback that the strongest seasonal period of the year - by far - was the period starting a few days before Thanksgiving and ending a few days into the New Year.
 
So...here we are.  Not only that, but as I wrote on Friday, the "market" is very oversold, and has a strong propensity to produce a "recoil" rally when it hits this degree of "strain" (as seen in the chart from Friday's post).  I liken it to a rubber band wound very tightly, and any release of that pressure produces a very notable energy source.
 
At the same time, we've seen "some" of our Psychology Composite indicators that have been giving us indigestion for the last few months starting to nudge into favorable territory.  For instance, you can see below that the Corporate Insiders have moved dramatically down to the "buy" side of the equation.
 
 
That's our story, much as it was in Friday's post, but don't forget the bottom line is that we still have very bullish Monetary and Valuation conditions, so even though the short-term might cause some concerns, the long-term expectations are still very bright.
 
Don Hays
 
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