Four Reasons Why Stocks Might Retrace

Dec 27, 2021

Stocks rallied all last week, in the proverbial 'Santa Claus Rally'. The S&P 500 bottomed out at lows at 4545, and spanned almost two full handles since then. Currently, we are ranging just below highs. The Kovach OBV has completely flattened. The fact that we are near highs, have little momentum, are close to the end of the year, and are still grappling with Omicron worries (including canceled flights), suggests that we may anticipate a dip in stocks into the beginning of this week. We should support at 4693 and 4668, if we do see a retracement. We will see if the holiday exuberance kicks in again this week, but a retracement is highly likely in the mean time. Our next target for stocks is 4763.