The S&P 500 slipped 0.6% on Tuesday after the good feelings surrounding last week’s Santa Clause rally left town.
Headlines haven’t changed in a meaningful way, but the calendar rolled over, and we find ourselves in a new year and a new quarter.
All of the repositioning that took place in the final weeks of 2023 is done, and professional investors are starting with a clean slate.
Gone is the pressure to chase prices into year-end, and now these institutional money managers are free to trade the positions they believe in, not what they think investors want to see on their year-end statements.
And so far, it seems like big money doesn’t want to chase anymore. One day doesn’t make a trend, but these are the early hints that changes could be blowing our way.
I was on vacation last week, and as a personal rule, I didn’t trade, but now that I’m back in the office, it’s game on.
I’m not ready to jump on the short bandwagon after a few hours of weakness, but if this sticks around, I’m happy to start with a small short and a nearby stop.
As I’ve written before, shorting an uptrend is one of the hardest ways to make money trading because it requires impeccable timing. But if we approach it with a good risk management strategy, we can take a shot relatively safely.
The index bounced off of the afternoon lows in the final minutes of the session, so I didn’t pull the trigger on a short position yet, but I will be watching and ready to short continued weakness today.