Tom Scollon
Tom Scollon
Chief Editor

I traditionally have written about the Santa Claus rally about this time of the year but by the time you read this it will all be over and you will be ready to tuck into your Christmas roast turkey or iconical Aussie seafood Barbie.

This time of the year is variably described as the silly season, time to be jolly etc., It can be the silly season on our markets as this time of year not just because of the Santa Claus rally but because that rally and good cheer can continue well into January. Even though many are on holidays - and that includes Instos and serious punters - we can still see markets move strongly. Strong moves – either up or down – can surprisingly be made at a time when others area at play sunning on the beach or skiing off foreign Alps. They can return to find the market has made a couple of hundred points.

Many have the view that profits since March have been so kind that they should not be greedy and thus take profits now. And so sell in May and go away has been replaced by sell now and go away. And that is precisely what we have seen over the last months - profit takers getting out. They may be right. They may be wrong. If they are right they can wait for the next big retreat. If they are wrong they may just have it find a way back in.

The last few weeks have been very interesting to observe as what we have been seeing is a classic battle between the bulls and the bears. This battle has a more intellectual and less mongrel element to it. Not a huge amount of debate going on but what debate there is more tempered and considered than what we were seeing a few months ago. But you sense real vacillation going on with neither the bulls or the bears trumpeting loudly. Neither feels overwhelmingly convinced of their own direction.

Maybe the rally we have seen in the last few months has legs. Maybe not. Maybe there is another leg down. Maybe the market is in for a long sideways move. I hear respected analysts and commentators express the full spectrum of views.

Yours truly? Well I think we will see a rally in the coming weeks and then a retreat that will make for some good buying. I have been buying into this market over the last month on down days as there is a prospect we could see this rally extend for another few weeks with maybe 10-15 percent or more. Not much you say compared with the last few months. Well picking the right stocks with leverage can realise a very tidy sum.

That aside. So I expect a rally over the coming weeks and maybe months and then I think we will see a retreat that could also be slow and classic that even the slowest of 'shorters' can get on board.

And then yes we can better assess risk and whether to buy for the long term. Up until then I am treating the market as a play thing and not one for a long term relationship. I am merely flirting.

But above all it is time to put our charts away for a period and take in the good cheer and catch up with family and friends. On behalf of all at Trading Tutors I would like to wish all readers a very happy Christmas; we hope you have a well earnt holiday break and a healthy and prosperous New Year and 2010.

Enjoy the ride

Tom Scollon
Chief Analyst