The rally continues - I need to sell some stocks for tax purposes so how am I choosing what to sell in this rally

Since the beginning of November, I've been reluctant to sell winners, but for year end tax purposes, I have to. Here are my thoughts and reasons.

A look at the markets

This past week was crazy. I’ve been trading for a while and I’ve only seen this type of market a few times. If you’re like me, you’ve felt “I don’t want to get in and then have the rally stall and immediately lose money”. So let’s just recap some things that have happened.

• The S&P rallied +2.7% now only 1.6% away from RECORD high!

  

  Weekly chart of $SPY in Trendspider

• DOW & NASDAQ 100 hit all-time highs

• FED holds rates unchanged – expects 3 rate cuts in 2024

• FED member John William goes on CNBC and says “premature” to be thinking about March rate cut

• Volatility hits a 4-year LOW

  

  1 year chart of VIX shows the slide

• Retail investors are buying the most stocks since March 2022

• Jim Cramer says the recession is NOT coming

Based on his track record, this should be worrisome

• AAPL hits new record high

  

  $AAPL in 4 hour algo in Trendspider - solid performance

• China’s central bank injects record monthly amount into financial system

• Germany, France and India stock markets hit all-time highs

• U.S CPI 3.1% YoY in Nov,  in-line with expectations

• Goldman Sachs expects FED to start cutting rates in March (expects 2 back-to-back rate cuts of 25bps)

• Alibaba hits a 52-week low

  

  $BABA in 4 hour algo in Trendspider

• Pfizer hits a ten year low - I’m out of this name

• SEC holds meeting with BlackRock to discuss its Spot Bitcoin ETF

• JPMorgan says Ethereum will outperform Bitcoin in 2024

• 30-year mortgage rates now below 7%

• U.S  retail sales increase +0.3% in Nov vs -0.1% expected

• An all-time high of Americans spend +50% of their income on rent

• Restaurant prices are up 24% since January 2020

• Bill introduced in the Senate that would force big investors to sell off all the single-family homes they own over 10 years

• US consumers are spending at record levels, and economists are mystified, struggling to forecast an end point

• Holiday spending expected to reach record levels this year, totalling +$966 billion

All of this and you have this post I found that highlights IWM performance.

$IWM turnaround has been legendary

I’ve often said that either the other indexes have had to come down or the laggards had to come up, but I didn’t expect it this fast. You’ll see in the 6 month chart the catch up that IWM has made.

6 month comparison of IWM DJI SPY QQQ

If we bring this in to just a 1 month comparison it’s even clearer where the trend has gone - IWM is coming up rather than the others coming down.

1 month comparison of IWM DJI SPY QQQ

I also posted this chart in the newsletter this week that I think was important.

The S&P is overbought using the RSI indicator. The only other readings above 40% were in June 2003 and June 2020. Clearly it’s not bearish

Above there’s a good mix of bullish and bearish things that happened with charts. Count me in the bullish camp right now.

How I’m handling my accounts in this bull market