HO! HO! HO! The Santa Claus rally appears to have started Monday with a very strong move to the upside. Tuesday pulled back just a little bit, which should be expected with Monday’s big day to the upside. Three more trading days and we should be able to lock in a big year for HCM and those we trade for. The market has traded just about spot on as we have been predicting with the Covid news constantly being talked about, discussed, and never-ending on the news media. But we must trade the market we have, not the one we wish we had. With that said, if the next three days hold up, it will be another big year for all of us.
I have constantly been asked what I think the market will do in 2022. Let me answer by saying no matter what I think, we will be trading our system. Math, not emotions. But here’s my take on next year. The market will see additional volatility, probably for the first half of the year. A 10% correction should be expected and, in all probability, the HCM-BuyLine® will hold, and it will be a buying opportunity. We think the market in 2022 could produce gains in excess of 10% on the S&P 500.
Mid-term elections are next year and having a down market has a bad effect on incumbent politicians getting reelected. They will not want that going into the midterms. The Fed will raise rates 3 times, but we do not see them raising a 4th time, so stocks will be a much better investment than bonds in 2022. Inflation will be persistent, but remember, markets can and have moved much higher in an inflationary environment. There is still a tremendous amount of cash on the sidelines that is yet to be invested. We think Covid will start to roll over in the first quarter of 2022 which will be good for the markets in Q3 and Q4.
I hope everyone has a great week and a happy new year!!