Market at a Glance - 1/25/2024
By: Christopher Mistal
January 25, 2024
Please take a moment and register for our member’s only webinar, February 2024 Outlook and Update on Wednesday January 31, 2024, at 4:30 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 outlook for February, discuss the results of the January Barometer and January Indicator Trifecta, 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.
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Market at a Glance
1/25/2024: Dow 38049.13 | S&P 4894.16 | NASDAQ 15510.50 | Russell 2K 1975.88 | NYSE 16889.52 | Value Line Arith 9870.74
Seasonal: Neutral. February is in the middle of the “Best Months,” but the market’s historical performance has been lackluster. Election year Februarys are second worst month of the year for DJIA and S&P 500. Massive gains in election year February 2000 by NASDAQ and Russell 2000 boost their historical average gains, frequency of gains is still uninspiring. Presidents’ Day is the sole holiday that exhibits weakness the day before and after.
Fundamental: Mixed?  Q4 GDP advance estimate came in today at a solid, better-than-expected, 3.3%, driven mostly again by consumer spending. Growth is neither too hot nor too cold. CPI has ticked higher to 3.4%, but PPI fell in December. Inflation is still stubbornly above the Fed’s stated 2% target. Corporate earnings forecasts are cooling, and reports have been hit and miss.
Technical: Partial break out. DJIA, NASDAQ 100 and S&P 500 have broken out and closed at new all-time highs. NASDAQ Comp and Russell 2000 have not. Weekly breadth metrics have been tepid which suggests leadership could be struggling to pull the laggards higher. Climbing 10-year Treasury bond yields are also a growing headwind.
Monetary: 5.25 – 5.50%. The Fed meets next on January 30-31. Currently, market expectations for a cut this soon are essentially zero. Expect another reminder on data dependency and an assessment of risks from the Fed at this meeting. The market does appear to be coming to terms with the possibility that interest rates are likely to remain higher for longer. It may also be time to consider that once the Fed starts cutting, the pace could also be slower than expected.
Sentiment: Retreating. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 52.9%. Correction advisors are at 30.0% while Bearish advisors numbered 17.1% as of their January 24 release. Compared to mid-December levels, bulls and bears have both retreated while the correction camp has grown. At current levels, sentiment is essentially neutral. It is not in the danger zone or the opportunity zone.