SANTA CLAUS RALLY

Let's put this information under the topic of making more money. Well, that's a big surprise, I can hear you commenting. Like all the other messages and blogs are about something different. This is a good time of the year, historically and histrionically. It proves out most every year---except 1997, drats.
There is a tendency for the stock market, and several stocks within the market to a higher degree, to move up at the end of the year. How to play this movement? We'll get to that in a moment. First though, just what is a Santa Claus Rally? Well, you think long and hard and realize it must have something to do with Christmas. And for the most part you would be right on. There is no technical definition of this phenomenon, but there are several ideas that bring it to life. Some say it is the last five trading days of the current year and the first two trading days of the new year. That's close enough.
I think it's a bit longer. My Santa Claus is a little chubbier. It starts earlier, say after the December expiration date, or third Friday, and goes deeper into January. If fact it runs into the January Effect.
If you get into a position on Dec. 23rd instead of Dec. 27th, it's usually no big deal. It is a bullish trade, either in stocks or in options. To add to this you can trade positions that have a higher likelihood of moving in this time period. Stocks like the retail stores, online selling services, gift companies. I'll add to this stocks getting ready to participate in the January Effect.
See the next blog called the January Effect. That will add gravitas to this blog.
Here are some potential things you can do:
1)  Check the news. How is shopping going? What was Black Friday like (this year it was awesome); Local Saturday (it was also really good; and Cyber Monday---another homerun.
2)  How about sales the rest of December? Great so far.
3)  What is the market like? It's range bound. Can it be played? It can and it is. Play the DIA options as they near support and resistance levels.
NOTE: Many options now trade weekly. The DIA (ETFs) have an expiration date for Dec. 29th, as well as the regular option expiration date in January. Some have already traded it once.
4)  Do short term in-and-out plays, ROSS Stores (ROST) has been good. There is a lot of life left in this stock.
5)  Look for stocks with large swings between support and resistance. Check out LULU, NGLS and now ROST. Choose carefully. Probably slightly in-the-money options are the way to go. Don't get greedy. A quick .50 cents on ten contracts is $500.
6)  Consider all the news. I think the blog I wrote called Picturesque is one of the most important articles I've ever written.
Look at the whole picture. Give your stock a chance to work.
7)  There are so many great covered calls stocks right now. I'll be putting on a January list by Monday.
8)  Survey after survey, analysis after analysis, point to the fact that there are bargains everywhere. Stocks are trading at incredible P/E ratios. Also, many stocks are trading at great book values. For example: MSFT could be at $75 and it would seem normal./ Berkshire-Hathaway ($117,600 per share---and a good bell weather stock for all of America) could be at $250,000 per share and it would be still at a good P/E ratio. There are hundreds of others.
NOTE: Again, read the upcoming blog on the January Effect.
One last thing about the Santa Claus Rally. It's usually followed by a very good January, some think it's the best month of the year. I agree, pending other global news.
That's it for now. Let's all get ready for a great and prosperous New Year.
Wade