"If Santa Claus should fail to call, Bears may come to Broad and Wall." I love these old Wall Street historical sayings. There can be some truth in these as there is a lot of wisdom and trading psychology behind many of these quotes, concepts, and rhymes. I also appreciate the generation and history of the time. The New York Stock Exchange is located at the corner of Broad Street and Wall Street.
Today is the last day for the Santa Claus rally and the market is down during the 7-day period (last 5 trading days of the year plus the first two trading days of the new year). Also, underneath the surface, we have found day trade shorts more profitable the last 6 months. It has been more difficult than average to short the market the last few years. We highlight a strategy that has taken advantage of the short side that has started to emerge once again over the last six months. Additionally, the market was down intra-day in 2024.
We are short term traders, so we aren't going to load the boat on a long-term call by taking a big long or short position, but we do actively trade both sides of the market. As technology plays a bigger role, the way humans make decisions and the cycles in the market will be different than the past. As long as humans are still in control, there will still be emotion and psychology. In an organic world, I don't believe technology guarantees prosperity 100% of the time.
In 2024, the market was down intra-day more than it was up. All of the net gains were in the overnight session. There were some nice opportunities on the short side in 2024 that I am implementing in 2025 for short term day trade shorts. While I'm not calling for a bear market, we could see some continuation of nice opportunities for day trade shorts, even if the bull market continues.
Gap Continuation 2019, which uses a $700 stop loss (and is long today), took some nice short trades in 2024 and was more profitable on the short side than on the long side for day trades during the last 6 months of 2024. Maybe 2025 will be the opposite of 2024 and will show a net gain intra-day and a net loss overall. Either way, we have strategies that trade both sides of the market.
Gap Continuation 2019 is in the Stock Index Portfolio 24 and One Million MNS. Below is the latest TS Performance Summary for past three years with $25 round turn slippage and commission as well as a 6-month report of the short trades, showing the potential change in direction of the market, as the prior 2.5 years before, short trades were very "negative".
Hypothetical Short Trades Last 6 Months $25 round turn slippage and commission.
Hypothetical Performance Summary (3 Year)
$25 round turn slippage and commission
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