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

Since 1896, the Dow Jones Industrial Common has rallied seven out of ten instances 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. For those who take a look at it, its overbought situation is sufficient to instill the worry 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 facet.

Nonetheless, a 70% seasonal likelihood is fairly important. So, if you’ll soar in, the place’s a great place to hitch a journey on Santa’s sleigh (with out getting “slayed” on a large 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 file highs, DIA’s first line of assist 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 assist on the former resistance “vary” centering round $352. DIA is presently pulling again, so let’s check out the value motion on a day by day chart.

CHART 2: DAILY CHART OF DIA. Bollinger Bands and historic assist 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 enrich this studying, and, certainly, value closed above the higher band final Friday.

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

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 may see this as a good set off for market engagement. Simply keep in mind that seasonal tendencies are by no means assured, so keep watch over technical and elementary developments earlier than trying to leap into this anticipated (and all the time welcome) vacation rally.

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