December 22 is traditionally one of the best days to be LONG the UK100, history shows there is a 75% probability of the index closing higher today. Indeed five of the best trading days of the entire year occur in December, moreover they occur after December 21. Today is the first of those days. So its little surprise that the UK1oo has followed on the coattails of the US markets to record highs. Next Wednesday December 27 has an even higher percentage chance of finishing above its opening price at 76% (the second best day of the whole year, the best being June 6). December 24 (this year a non trading day) is fifth on the list at 72% followed by the 23rd and 29th both with a 70% chance of rising prices. How do I know this? and how reliable is the data? The source is one of the first trading books I bought in 1998, “The Stock Market Handbook” by David Schwartz, for the last 19 years I have manually updated the data. It shows that December and the “Santa Rally” is real and that for the UK100 the month performs very well. Since 1970 December has had a positive outcome in 41 years, of the 6 years when it closed down three have been recently in 2002 , 2014 and 2015, however, 2017 looks on course to be returning to trend.
Technically, the index is approaching overbought but today’s 7613.6 high is beyond my target 3 from my entry at 7406 two weeks ago and the 161.8 Fibonacci extension of the December 6 low of 7284. All of which we discussed in the last LIVE ANALYSIS webinar of 2016 on Tuesday. Do whats probable, protect your capital and always manage your risk. Happy Christmas.
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