ManyPeaks.com

The reversal of last year’s seasonality illustrates the market’s devious method of hurting and confusing the most possible participants.

2004’s big late-year rally lasted all the way thru the New Year.. then ended abruptly about 1 whole hour into 2005’s first trading session. The January effect — which even many short-oriented hedge fund managers anticipated — failed miserably. Even talented traders such as RevShark gave the long side too much “benefit of the doubt” at this time last year.

So what about this go-round? Well, we traded sideways for all of December 2005. Folks like me kept waiting for others to get a rally going, and the poker game ended in a standoff. In the last few days of 2005, stocks sold off hard as traders recalled the previous January’s bloodletting and headed for the hills.

Now the much anticipated rally is finally underway.. those recent sellers have to be feeling the pressure to reload or be left out. Thus the strong momentum we’re seeing now.

I find this psychological warfare to be an extremely challenging task. That’s why I love the markets so much.

Long big time, but cautious as usual