Here's My Game Plan as Conditions for a Market Bounce Improve
It won't take much positive price action to attract buyers who are anticipating a Santa Claus rally.
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A blockade of Venezuelan oil tankers is pushing up oil and gold prices on Wednesday morning, but the key question for investors is whether the indexes have finally found support after four sessions of struggle.
Stocks bounced slightly on Tuesday afternoon, providing some support at the day's lows, but the dip buyers have shown little interest recently as groups like data centers and semiconductors have come under heavy pressure.
Many market participants are still hopeful that positive seasonality will kick in with less than two weeks left in 2025. The traditional period for the well-known Santa Claus rally is the week between Christmas and New Year's Day, but if buyers gain confidence that Santa will show, they will front-run the action and start buying earlier.
Bulls were hopeful on Tuesday that weaker-than-expected employment data might accelerate a Fed interest rate cut, but the data was mixed: more jobs than expected, but an uptick in the unemployment rate. Inflation numbers are due on Thursday, which could serve as a catalyst. In the U.K., stocks had one of their best rallies in months after a downtick in inflation readings.
It won't take much good news to draw in buyers at this point — they want to embrace a year-end run and need a good excuse to shrug off the recent volatility in the AI sector. Conditions are excellent for FOMO to develop quickly if there is even a little upside momentum.
My game plan is to be aggressive in pursuing short-term bounces. We need to hold above Tuesday's lows and close strongly to help turn sentiment, but plenty of stocks have pulled back sharply and are well positioned for a recovery.
At the time of publication, Rev Shark had no positions in any securities mentioned.
