- Moving the markets
The market kept up its winning streak today, with the S&P and Nasdaq scoring big while the Dow barely budged.
The S&P 500 has been on a roll for seven weeks, its longest run since 2017. The index is up more than 3% this month. The Dow and the Nasdaq are also up by more than 3% and 4%, respectively.
The mood improved last week when the Fed hinted at three rate cuts in 2024, saying inflation was cooling off. Treasury yields fell, with the 10-year yield dropping below 4%. Or maybe the Fed just gave in to inflation and got a reminder that 2024 is an election year.
But the market may not have it so easy in the coming weeks. Stocks are pricey and earnings may suffer. The bulls and the bears may fight for control, and it’s not clear who will win.
Traders also got a reality check from the Fed’s Goolsbee, who said the market was too optimistic about the rate cuts. He said the market jumped to the conclusion that the Fed would normalize quickly, but he didn’t see that happening.
That scared the bond market, as yields rose but didn’t reach 4%. A short squeeze fizzled, but the “Magnificent 7 stocks” hit a new high. Apple went down, facing trouble with China and the US over its products. The dollar was steady, gold gained a bit, and oil spiked but retreated.
The S&P’s seasonality chart still looks bullish, but will that last beyond mid-January?
2. Current “Buy” Cycles (effective 11/21/2023)
Our Trend Tracking Indexes (TTIs) have both crossed their trend lines with enough strength to trigger new “Buy” signals. That means, Tuesday, 11/21/2023, was the official date for these signals.
If you want to follow our strategy, you should first decide how much you want to invest based on your risk tolerance (percentage of allocation). Then, you should check my Thursday StatSheet and Saturday’s “ETFs on the Cutline” report for suitable ETFs to buy.
3. Trend Tracking Indexes (TTIs)
The market was mostly positive, as two out of the three major indexes gained value. This maintained the optimism of the investors. Our TTIs barely moved and supported our existing view.
This is how we closed 12/18/2023:
Domestic TTI: +7.47% above its M/A (prior close +7.84%)—Buy signal effective 11/21/2023.
International TTI: +6.23% above its M/A (prior close +6.20%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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