Christmas might be over for some, but for the stock market it is still enjoying the presents that Santa Claus Rally is giving.
The Santa Claus rally is a period between christmas and the new year where stock markets rally to a high point. There are many different explanation for this phenomenon, some say is due to people investing their christmas bonuses while others claims that shortist are on holidays. For this year, some claim to be the effect of the Fed's cut in stimulus program that demonstrate strong recovery in the economy. For me, it does not really matter as long as the market is moving in the right direction.
As seen from yesterday's market result, the top 20 counter are all GREENS, which shows that the rally is indeed beginning. It is a good time to buy(almost any stocks). But the question is how long will it last? and what to do when it ends? The obvious answer is to take profit and wait for the next entry point.
So the more important question is when to take profit? For me, there are 2 answer. 1st is when the stock has reached your target price (pretty obvious). 2nd is when the stock seems to have peaked at the current price. For analysing when the peak is reach, I normally look at 2 indictors, the stochastic cross over at the top and the closing major support price. (i cant find a good picture right now, will attach it once I get home)
Meanwhile, enjoy the rally and have a wonderful holiday!
Side note: if you still considering what to enter, you might want to have a look @ krisenergy and mirach energy. Most stock have already begin their rally but these energy stocks seems quiet. they might be having some delay effect.
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