On Seasonal Cue, Stocks Roar to Begin January – But How Long Will it Continue?

Over the weekend I read most of Martin Zweig’s Winning on Wall Street – which I’d highly recommend to traders and those passionate about the market.

Zweig breaks down some interesting seasonal features that seem to correlate with the social mood of the public.  When people are in a good mood, they tend to bid up stocks (socionomics, anyone?) – and not surprisingly, these moods are regular enough to be statistically significant, according to Zweig’s data crunching.

Among the best performing days, on average, were the days leading up to New Year’s, and the first trading days after January 1st.

Right on cue, the stock market roared today, with the S&P 500 closing above the 1271 mark:

Stocks continue their roll to start 2011. (Source: StockCharts.com)

While I suspect we’re due for at least a short term pullback in stocks, since investor sentiment is extremely high (and probably heading higher after today), traders looking to short this market may want to wait out this first week of January, which traditionally has a very positive bias.

Of the potential short candidate dogs we highlighted last week, Canadian Solar stood out from the crowd in it’s relatively poor performance today – barely limping to a positive finish.