1/7/22 Heed This Warning … What the First Five Days of the Year Tell Us

Hello! Here’s what’s happening in the market today…

News:

The December jobs report comes out at 8:30 a.m. Eastern. Initiations are unemployment is low and jobs are rising.

The most notable market movers this morning are the meme stocks…

GameStop Corp. (GME), AMC Entertainment Holdings, Inc. (AMC), and Digital World Acquisition Corp. (DWAC) are all up. I’m not looking to trade any of these right now … but if the trend continues there could be some great action coming to the market.

But not all markets are showing risk-on characteristics. Bitcoin and the crypto market are falling with no bottom in sight. Bitcoin’s decline could reach as low as $40,000 or $30,000. I’m HODLing.

Technicals:

Indexes look like they’re trying to bottom. However, I suspect the market could take a little more time to shake out.

The VIX rose slightly again yesterday. But hasn’t really taken off. (Bullish)
The put-to-call ratio is near oversold. (Bullish)
RSI readings remain neutral. (neutral)

All things considered, I suspect the bottom is in for now. But the market could move sideways for the next few days…

Timing:

Photo by Aaron Hilborn from Pexels

The first five days of trade in the new year can act as a warning system. When the SPY’s first five days end green, the SPY ends the year in positive 83% of the time. When it finishes those first five days in the red that figure drops to 56%.

Unless we get a strong bounce today the SPY will most likely finish the first week in the red.

Let’s look back at 2017 compared to 2018 for some historical perspective…

SPY 1-week candles – Chart via Yahoo! Finance

Futures are green at writing. I’m waiting for the jobs report to come out before making any trades.

Today I’m generally bullish but risk-off.

Watchlist:

*Low Float

*CELZ is on watch
*NES has resistance at $3
ESTE has support at $13
LQDA has support at $6
F has support at $22

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