- Moving the market
Despite an early dip, the Dow managed to recover, and all three major indexes maintained the bullish sentiment from the previous day, with the Nasdaq leading the charge. However, Small Caps diverged and closed in the red.
Traders were grappling with the implications of Trump’s announcement of 25% tariffs on products from Mexico and Canada, along with a smaller 10% levy on Chinese goods. There are lingering questions about whether these tariffs will be implemented and, if so, at what stage in the product creation chain they will take effect.
As a result, the dollar rallied, but American automakers Ford and GM suffered sell-offs. The import tariffs are expected to impact not only foreign cars but also domestic ones, due to the importation of several vital parts.
Several macroeconomic data points, such as slowing home price growth, collapsing new home sales, and a contracting manufacturing index, contributed to the drop in the Citi Economic Surprise Index. These factors could not be offset by the post-election improvement in consumer confidence.
The Mega Cap basket surged higher after finally finding some stability, despite slightly rising bond yields. Bitcoin remained in a correction phase, heading down towards $90k, while gold managed to edge higher after yesterday’s sell-off, even in the face of a strong dollar.
Currently, we are in a strong seasonal pattern. According to ZH, since 1950, the S&P 500 has risen 80% of the time between the Tuesday before Thanksgiving and the second trading day of the New Year, with an average gain of 2.6%.
Will history repeat itself?
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)
Although the major indexes experienced a sluggish beginning, they gradually gained momentum and managed to secure a solid gain by the end of the session.
However, Small Caps did not share in this upward trend and closed the day in negative territory.
Meanwhile, our TTIs remained neutral and showed minimal change from the previous day’s close.
This is how we closed 11/26/2024:
Domestic TTI: +10.53% above its M/A (prior close +10.52%)—Buy signal effective 11/21/2023.
International TTI: +4.65% above its M/A (prior close +4.78%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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