- Moving the market
This morning, the major indexes declined, with the Dow Jones Industrial Average marking its first 9-day losing streak since 1978. This streak began after the index surpassed the 45,000 level for the first time earlier this month.
Traders attribute these losses to a rotation from “old” economy stocks to the new technology sector. However, Nvidia, which was recently added to the Dow, also struggled, dipping into correction territory yesterday and losing an additional 1.2% today.
Conversely, Broadcom has emerged as a new tech favorite, reaching new highs on Monday, while Alphabet, Apple, and Tesla also hit record levels.
Today’s market pullback was anticipated ahead of the Federal Reserve’s decision on interest rates. Wall Street remains concerned that the Fed might make a policy error, potentially leading to a market blow-off top or accelerating inflation.
The US macroeconomic data index suffered another blow today, with negative reports on core retail sales, industrial production, and capacity utilization affecting the market and driving away bullish investors.
The major indexes retreated further, with the breadth indicator worsening for the 12th consecutive day, marking the second-longest stretch of weakness in 100 years. This indicates that market advances are being driven by only a few stocks, with the majority not participating.
While Nvidia nears a 13% drawdown from its highs, Bitcoin is testing new record levels. Bond yields reversed yesterday’s rally, the dollar remained in a tight range, and gold dipped below its 50-day moving average.
Will tomorrow’s Fed decision on interest rates lift the equity markets out of their current slump?
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 stock market began the session on a negative note, with equities opening in the red and failing to recover throughout the day.
Bearish sentiment dominated, steering the major indexes towards a losing session, with the Dow leading the decline.
In tandem, our TTIs also saw moderate drops. However, these declines did not alter our current bullish outlook on the market.
This is how we closed 12/17/2024:
Domestic TTI: +5.27% above its M/A (prior close +6.11%)—Buy signal effective 11/21/2023.
International TTI: +3.16% above its M/A (prior close +3.66%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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