Chart of the Day: S&P 500

Though there is a reasonably strong seasonal tendency for stocks to rally into the end of the year, consider the dangers in one-way trades. Many people know this tendency (the famed Santa Clause rally), and are probably banking on it, so there is risk of at outsized decline if markets do not stage a quick recovery. It is not so much that we are watching a specific level in the market; the important concept is structural—if the bulls are truly in control, we should see a fairly quick, sharp recovery from last week’s selloff. If not, look for a possible short-term downdraft.


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.