The holidays bring more than just gifts under the tree, excess calories, and rude in-laws. December and January represent two of the best months of the year. However, there is often a pause in the uptrend in early December. With US markets having experienced such an extreme “Trump Bump” since the election, patience is likely a virtue for the bears and bulls alike.
Both on-balance volume (chart) and the advance/decline line refuse to confirm the new highs in equities. The McClellan Oscillator closed above 150 on Friday (176) which is the level the McClellans describe as necessary for equities to obtain “escape velocity”; bullish. It is however, bumping up against its upper Bollinger Band which is a warning of at least a short-term correction in equities.
