Foreword
This is a quick note, which tends to be just off the cuff thoughts/ideas that look at current market situations, and to try to encourage some discussions.
An update to the Santa Rally, 2023.
As usual, a reminder that I am not a financial professional by training — I am a software engineer by training, and by trade. The following is based on my personal understanding, which is gained through self-study and working in finance for a few years.
If you find anything that you feel is incorrect, please feel free to leave a comment, and discuss your thoughts.
Update
Just a quick update for those who’ve been following my trades this year (prior post: https://jankythoughts.com/2023/11/05/november-5-2023-ho-ho-ho/).
Yesterday, November 15th, 2023, I’ve taken off basically all my call spreads which were betting on the Santa Rally.
Yes, I understand Christmas isn’t for another month and change.
The reason for this is 2 fold:
- On Tuesday (11/14), markets and bonds ramped dramatically after a CPI print that is only slightly below expectations.
- After the ramp, the market was generally moribund and directionless, though trading feels a little heavy.
This is just a feeling, and well, trading is all about sentiments — it feels like the move on Tuesday was a massive short squeeze. Further, it feels like most of the shorts are now out of their positions.
Which suggests that at least in the short term, markets may trade weak/sideways. Since a call spread decays theta over time, it seems like a good idea to close out the spreads and take my profits.
Maybe if the market perks up again I’ll reenter the Santa trade. But for now, I’m taking a breather.
Janky Thoughts 