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It is that point once more—vacation cheer, reward spending, and, most significantly, Santa Claus on Wall Road.

Since 1896, the Dow Jones Industrial Common has rallied seven out of ten occasions in December. This got here to thoughts when doing a scan for shares (and ETFs) for New 52-Week Highs, the place DIA (SPDR Dow Jones Industrial Common ETF), our Dow Jones proxy, got here up. When you take a look at it, its overbought situation is sufficient to instill the concern of heights in most merchants and traders.

How To Scan for Shares Making New 52-Week Highs

• In SharpCharts, from Your Dashboard, scroll the Member Instruments on the left and click on on Pattern Scan Library.
• The New 52-Week Highs scan is the second from the highest on the left aspect.

Nonetheless, a 70% seasonal likelihood is fairly important. So, if you will leap in, the place’s a great spot to hitch a journey on Santa’s sleigh (with out getting “slayed” on an enormous drop)?

Let’s check out DIA’s value motion on a weekly scale.

CHART 1: WEEKLY CHART OF SPDR DOW JONES INDUSTRIAL AVERAGE ETF. At document highs, DIA’s first line of help is at former resistance ranges, examined twice in 2021 and as soon as in 2023 earlier than being breached.

After surpassing its 52-week excessive, we will see help on the former resistance “vary” centering round $352. DIA is at present pulling again, so let’s check out the worth motion on a each day chart.

CHART 2: DAILY CHART OF DIA. Bollinger Bands and historic help vary appear to converge on the $352 vary.

We’re plotting a Relative Energy Index (RSI) under the chart to point out simply how overbought its studying is on DIA’s value surge. We plot Bollinger Bands to enhance this studying, and, certainly, value closed above the higher band final Friday.

With DIA now pulling again, we will arguably anticipate it to succeed in the help ranging close to the $352 value degree. This value degree additionally coincides with the Bollinger Band’s center band, strengthening the case that, at the very least by way of market sentiment, patrons are prone to leap in at that degree. This may immediate a bounce and, fairly presumably, the Santa Claus rally that seasonality merchants expect.

The Backside Line

Contemplating the historic 70% chance of a December rally within the Dow Jones Industrial Common and DIA’s present pullback from its “overbought” highs, traders would possibly see this as a positive set off for market engagement. Simply do not forget that seasonal tendencies are by no means assured, so regulate technical and basic developments earlier than making an attempt to leap into this anticipated (and all the time welcome) vacation rally.

Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your personal private and monetary scenario, or with out consulting a monetary skilled.