As November came to a close, the market rebound out of the October correction had not only reset over bearish sentiment, but had put it wildly bullish and very unhealthy. Yet the Santa seasonal was oncoming and something had to give.  Santa's rally was not going to generate from such unhealthy over bullish conditions.

In NFTRH we reviewed this seasonal pattern (from Sentimentrader.com) and anticipated some corrective activity in the first half of December (NFTRH+ offered a short on SPY, which went right to the downside target).  But this would just be a clearing of the decks for the portly man in red.  Here is the seasonal for December…

Looking ahead, here is the 30 year average seasonal for January…

You cannot take historical data as a be all and end all because it sometimes fails at the most inopportune times (part of why I take ‘quant' style analysis with a grain of salt), but it sure is a factor because it is the undeniable reality of what has happened before.