Certainly some of the weakness we have witnessed in December has been tax selling. There are plenty of weak stocks that have gotten weaker at the end of the year and this is pressuring the market.
This selling pressure on the weaker issues should be alleviated over the next two weeks and into early next year.
In fact, if you look at the thumbnail pieces of the charts above (right side) you can see the potential short-term bullish divergences of these internals with respect to price. Seasonality is also in the market’s favor as we move into 2016. So some recovery and mean reversion is likely to start, possibly early this week.
From an intermediate- to longer-term perspective, there are technical arguments that can be made that the NYSE and S&P 500 are tracing out very large rounding top formations. There are also technical arguments that 2015 was a bullish price consolidation that happened to see a bear market under the surface, and that the next and final wave higher for stocks might be right around the corner.
I will say that if the internals or underpinnings of the stock market do not improve as we transition into 2016, we could be in for a very ugly year. 2015 was a nightmare to trade, so here’s to hoping that 2016 (up or down) will be a little easier.
Thanks for reading.
Twitter:Â Â @MarkArbeter
The author does not have a position in any mentioned securities at the time of publication.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
