11-30-2015 Comments

Watch lists are updated.

With the small caps rallying, the ride to the end of the year has probably begun. I don't really recommend going short in a light-volume holiday trading environment. I still produce short watch lists in case things turn sour. However, I think it is true that a lot of stocks are in their own private bear market. The transportation sector turned sour followed by the energy sector followed by the retail sector. That is a lot of sector malaise. However, these could rally into the end of the year as it often is the case that stocks reverse in holiday-lite trading only to resume their major trends when the pros return from holiday. AMBA is an example of a small cap stock that has corrected 62% and may be reversing to the upside. It has climbed above the 10, 20 and 50-day moving averages and may show a volume trigger alert (pocket pivot) this morning. This is not on my watch list.

We will have to see if Janet Yellen can dampen the enthusiasm in small caps in December. Not all December periods are good on the long side. During late 2007 the path of least resistance was on the short side.