Watchlist: 12/13 Divergence and Taxes … Now is Buy Time

Market Notes:

We have a unique situation brewing in the markets. Something that you rarely see is happening now. And I have only one way to play it … Buy, buy, and buy more!

Photo by Artem Beliaikin from Pexels

The S&P 500 is at all-time record highs. The Dow Jones and the Nasdaq Composition are lagging slightly but remain only a few points off of their records and look very bullish. Lastly, you have the Russell 2000, which represents the small caps … It’s below its 200 day moving average. I think it’s selling at a huge discount right now.

It’s following a seasonal pattern, known as the “January Effect.” I’ve already begun buying TNA in anticipation. The average Russell 2000 return from December 15 through January 15 is 3.8%. Large caps average only 2.2% over the same period.

Headed into this bullish time for small caps my other positions are in SEV, LTRY, & VRAR.

The January effect is due to a few different things happening at once. First, there’s tax selling, investors take the loss before the end of the year. And there are holiday pay and annual bonuses hitting accounts. The tax selling beats up the stocks … The bonuses are used to buy the dip.

I remain extremely bullish on small caps. But I’m losing faith in crypto.

Bitcoin is consolidating near $50,000 and is spending time above and below its 200 day moving average. I’m a long-term Bitcoin bull but wary of the possibility of a breakdown. Nevertheless, I’m HODLing.

I’m staying risk on for now. This is the best time of year!

Watchlist:

*Low Float

*ISIG is on watch
*SGMA is on watch
*QTT recently had a reverse split
LWLG has resistance at $20

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