Posted
Dec 04 2007, 05:26 PM
by
Richard Schwartz
SEASONAL VIEW
. Even Doug Kass, a well-known bear and offshore hedge fund manager, has turned bullish for a year-end rally, primarily because of normal seasonal strength from Thanksgiving to Christmas. This worries me! Even the bears turning bullish, even if just temporarily, means everyone is on the same side of the teeter-totter. So I still recommend selling into this rally, say a little at a time. Recently the seasonals haven’t been working well because of the dominance of hedge funds, who all know the seasonals better than us and thus try to get ahead of them.
Schwartz View: I don’t want to get caught if really bad news strikes causing hedge funds to suddenly decide playing the seasonals was a red herring this year. Still, as a general rule I don’t like to be stubborn when the stock market goes opposite the way I think it should. But this time I may have to be for a time. I’m short a little but not enough to kill me if the market has its normal Thanksgiving to Christmas rally. But I sense this rally is only by traders, professional and otherwise, and that the public is really worried about the future. I reconnected to two old buddies recently who don’t follow the stock market and both brought it and the economy up and seem really concerned. My big question is how much performance I’m willing to forego if the market rallies through December or even longer. The pressure is on.
Investor’s Business Daily (IBD) turned bullish this morning too. Hm.