Christmas could bring correction

NEW YORK – Forget about the traditional Santa Claus rally on Wall Street, and get ready for the Christmas correction.

Some market watchers are warning that economic uncertainty will torpedo a record run in stocks, and that it’s only a matter of time before the implosion begins. Investors have largely ignored these admonitions, giving negative news an upbeat spin and sending stocks higher.

There’s consensus building that this stock frenzy might be setting the market up for a December surprise. Out goes the year-end rally investors have gotten used to, and in comes the long awaited stock market retreat.

“There’s an overall bias to be bullish out there, but the seasonal patterns of being more negative in September and October just didn’t hold true,” said Bill Strazzullo, chief market strategist for Bell Curve Trading, which uses market technicals to advise hedge funds and institutional investors.

“So, that means you can’t trust any of the seasonal patterns,” he said. “We’re in the last leg of the rally, and people are going to want to take their profits and take a step back.”

Indeed, October, known for seasonal slumps and historic stock market crashes, handed Wall Street its biggest gain all year. The month traditionally sees about 46 percent of the Standard & Poor’s 500 declining. This time around only 23 percent fell, and the index itself advanced 3.2 percent.