Market at a Glance - 12/21/2023
By: Christopher Mistal
December 21, 2023
Please take a moment and register for our member’s only webinar, January 2024 Outlook and Update on Wednesday January 3, 2024, at 2:00 PM EDT here:
Please join us for an Almanac Investor Member’s Only discussion of recent market action with time for Q & A at the end. Jeff and Chris will cover their 2024 Forecast and outlook for January, review the Tactical Seasonal Switching Strategy ETF, Sector Rotation ETF, and Stock Portfolio holdings and trades. We will also share our assessments of the Fed, inflation, the "Best Months" as well as relevant updates to seasonals now in play with a closer look at the status of the Santa Claus Rally and our January Indicator Trifecta.
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Market at a Glance
12/21/2023: Dow 37404.35 | S&P 4746.75 | NASDAQ 14963.87 | Russell 2K 2017.06 | NYSE 16724.92 | Value Line Arith 9972.07
Seasonal: Bullish. January is the last month of the best three consecutive months. Although average performance and rankings have taken a hit due to weakness since 2000, January is still #1 NASDAQ (since 1971) month of the year and #6 for DJIA and S&P 500 (since 1950). Election year Januarys have been mixed and weaker based upon average performance. Our Santa Claus Rally ends on January 3, the First Five Days finish on the eighth and our January Barometer gives its read at month’s end. When all three are positive, our January Indicator Trifecta is nearly perfect with 28 S&P 500 full-year gains in 31 years.
Fundamental: Just right? Atlanta Fed’s GDPNow model is now estimating Q4 growth of 2.7%. Inflation metrics continue to trend toward the Fed’s stated 2% target. Employment data has softened modestly yet remains generally positive. Corporate earnings are forecast to rebound nicely in 2024. Ignoring geopolitical concerns, it appears the economy may be headed toward a soft landing.
Technical: Partial break out. DJIA and NASDAQ 100 have broken out and closed at new all-time highs. S&P 500, NASDAQ Comp, Russell 1000 and Russell 2000 have not. Instead of the leaders getting dragged back down, we suspect they will eventually pull the laggards higher. Weekly breadth remains positive and supportive of an eventual across-the-board break out. 
Monetary: 5.25 – 5.50%. Stocks and bonds appear to agree that the Fed is done with hikes. Longer-dated bond yields have fallen substantially, and stocks have surged off their October lows. But monetary policy remains restrictive with short-term rates above 5%. The Fed has reminded multiple times that it remains data dependent. If inflation does reheat, Fed rate cuts could be delayed.
Sentiment: Holiday Cheer. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 56.9%. Correction advisors are at 25.0% while Bearish advisors numbered 18.1% as of their December 20 release. Market gains have pushed bullish sentiment higher. This is not unusual at this time of the year and the market has been up seven weeks straight. At some point the weekly winning streak will end and the market will hit a soft patch that could trigger a retreat in bullish sentiment. Until then, enjoy the yearend rally.