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US Market Sideways. Q4 Rally not as strong as usual this year

December 14th, 2009 Leave a comment Go to comments


Q4 Rally (Rally on Quarter 4 between October – December) on US Market known as the most consistent rally based on seasonality. Why this happen? Logically, this trend can be explained. As we  know every end of September, American people celebrate Halloween. After halloween, they will celebrate Thanksgiving. After thanksgiving there are Christmast and New Year in the end of the year. From these event, we all know that consumer spending between these 4 months is bigger than other common months in a year. So of course it’s not strange if we always see good uptrend movement on Q4. But as we know, Q4 Rally didn’t perform too good this year

Let’s see last chart of S&P 500.

Picture 3

As we can see together, the movement on Q4 this year didn’t move as strong as usual. This can be understand. Strong uptrend since July make the index kinda overbouht and lack of power to go advance. It’s need to breathe for a while before continue to trending again. For the last two months, i just play credit spread position for this sideways market. It’s the best strategy to use on this kind of market. S&P 500 move in trading range between 1110 and 1080.

Picture 2

On Sectoral Movements, we can see that Technology doesn’t lead the market. Utilities is the sector who lead the market. So it’s not a a very optimism sign of buyer.

Picture 1

Based on Dynamic Yield Curve, we can see that the market already reach its bottom and very long time uptrend will occur when the dynamic yield curve already normal like picture above. But i still worry about the large correction after depression (historically, depression ex : 1929 American Depression, 1973 Oil Crisis, 2000 Technology Bubble always need two bear wave to confirm the bottom)

Picture 4

We’ll already at 50% fibonacchi retracement. How much point again the index can go? We’ll see until end of year.

So for now, i still wait and see to enter large position on the market. I prefer to play spread for now, while i’ll see how the market move later.

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