Is the Playbook Too Obvious?
For all those talking about the year-end rally, I have been among them, November has been very robust, and quite frankly more than even the permabulls viewpoint. As one can see on the seasonality chart below of the last few years November has played out with its historical strength, averaging more than 6% and CLOSING higher than where it started November now for the last 5 years (there is still one more session but I am not going out on a limb here to say after Thursdays CLOSE we will have yet another positive one). But those who believe this white-hot rally will extend into December, and the conclusion of 2023 may need to temper their enthusiasm. Notice it tends to simply digest the big November move with a flattish return. The last 2 examples on the MONTHLY chart here show how December 2022 was a bearish engulfing candle losing almost 9%, and December 2021 was a bearish hanging man candle (preceded by the October bearish gravestone doji at the very 16000 number) before the very precipitous fall in 2022. Bulls should welcome a healthy, prudent pause next month.