- Moving the market
Today, the traditional seasonal softness of mid-December persisted, with major indexes fluctuating without clear direction and ultimately closing in the red, despite a surge in small business optimism.
An early rally in the Mega-Tech sector hit a ceiling, reversed, and erased initial gains, making the Nasdaq the biggest loser of the day. Additionally, the most shorted stocks fell again, wiping out last Friday’s advances.
Bond yields climbed, and the dollar rallied for the third consecutive day. Bitcoin tumbled but managed to bounce off yesterday’s lows, while gold maintained its upward momentum, reclaiming the $2,700 level.
Traders are now focused on tomorrow’s CPI report, which could significantly influence the Federal Reserve’s interest rate policy at its December 17-18 meeting.
Expectations are for a headline inflation increase of +0.3% for November and +2.7% over the past 12 months. Any softening of the CPI data could revive equity bulls, while worsening inflation data would give bears the upper hand.
Which outcome will we see?
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)
Despite a turbulent start, the major indexes eventually lost their upward momentum. This shift was primarily driven by growing concerns about the upcoming Consumer Price Index (CPI) report, which overshadowed the initial bullish sentiment.
Similarly, our TTIs suffered a decline. However, this did not alter our current investment view.
This is how we closed 12/10/2024:
Domestic TTI: +7.44% above its M/A (prior close +8.10%)—Buy signal effective 11/21/2023.
International TTI: +4.56% above its M/A (prior close +4.96%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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