Thanks to the feckless, soon to be outgoing President, Barak Obama, the last week of December 2016 was a horror show for the markets. Deliberate abstention at the United Nations for a Resolution against Israel, Secretary of State John Kerry’s follow up anti-Israel speech and the sanctions against Russia, did not sit well with investors and traders. Friday turned out to be the worst day of the week, thanks to the White House, profit taking and window dressing. That window dressing specifically targeted tech and biotech shares which were underperformers in 2016.
What could have been a super month of December following a spectacular November, wound up being slightly positive. In that last week, the Dow Jones Industrials (DJIA) which was toying with the 20,000 mark, fell to a level, now needing, 1.20% to make that historical mark. Fear not, the DJIA will hit 20,000; perhaps this week as buyers show up after the holidays.
Overnight futures indicated a positive open. It is safe to say that the first trading day of 2017 will not be a disaster as was the first trading session for 2016 when the SPX declined 1.53%. Furthermore, if you recall, in 2016 the equity markets went down in a straight line, experiencing the worst start ever to a year, with the SPX declining 11.35% by February 11. I expect that the stock market will be more robust in the first few weeks of the new year.
Over the holiday break, I performed some research on the markets, extending the analysis that I published with respect to Presidential elections, last year. While it is not yet complete, I will say that it appears that there is little if any pattern or trading bias that I can discern with respect to the period leading up to or after a Presidential inauguration. At most, it appears that if the incumbent party loses, markets tend to drop between the end of the prior year and Inauguration Day. However, the pattern is not strong enough to place any bets. I am more inclined to let earnings and the economy lead the markets from now till the inauguration.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DIA & DDM — although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
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