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Market Recap & Upcoming Week

As 2023 comes to a close, the markets have seen a year marked by significant events and trends, shaping up to be a year of recovery and resilience.

The year started and ended with strong rallies, overshadowing the spring’s regional bank crisis and fall’s concerns about rising interest rates. The middle of the year witnessed a robust summer rally, driven by a surprisingly resilient economy.

This resulted in equities delivering double-digit gains and a remarkable comeback for bonds. As we look back, 2023 stands as a testament to the benefits of a disciplined investment strategy and the value of seizing opportunities during market lows.

In the stock market, the S&P 500 experienced an impressive eight-week winning streak, a rare occurrence in the past 50 years. This rebound, particularly remarkable after the fall’s pressures due to surging interest rates, highlights the market’s dynamic nature where rapid shifts from loss to gain can occur.

Despite expectations for a quiet holiday week, the market’s momentum might carry this winning streak further. However, a pause is likely as we transition into 2024, awaiting new economic and inflation data.

While this winning phase will eventually end, the broader bull market’s end doesn’t seem imminent, reinforcing the importance of long-term strategy in investment.

This week, despite being shortened by the Christmas holiday, could still offer significant market movements. Investors are anticipating a potential “Santa Claus rally” to end the year on a strong note.

The bond markets will wrap up early at 2 p.m. on Friday, December 29.

Key economic data releases are few but noteworthy, focusing on the U.S. housing market. The S&P Case-Shiller Home Price Index and the National Association of Realtors’ pending home sales data are due, along with weekly initial jobless claims, inventory, and trade balance information.

Additionally, the holiday sales season continues, with retailers expected to offer substantial discounts to clear inventories.

Housing market data will be a focal point with the S&P Case-Shiller Home Price Index set for release, potentially shedding light on housing affordability trends.

Thursday’s pending home sales data from NAR is also anticipated, following an increase in existing home sales in November.

These reports come amidst growing homebuilder confidence. Meanwhile, the possibility of a “Santa Claus rally” looms, a phenomenon where the S&P 500 historically gains during the final days of the year and the start of the new year.

This trend, though not guaranteed, is often attributed to factors like holiday shopping, seasonal optimism, and institutional investors balancing their books.

Daily Trading Signals (Highlights)

S&P 500 E-mini Futures (ES1!) – Prices have hit our target which is the previous major resistance level, congrats to those who took this trade! 👏🔥📈

Since RSI is quite overbought, there is a good chance of some sideways movement or a slight correction before the uptrend resumes, so might be a good idea to take part or whole profits.

 

US 20+ yr Treasury Bond ETF (TLT) – Following up on this, prices have gone up an impressive 21.94% since the October bottom just 2+ months ago.

Congrats to those who took this position! 😎🔥💪

Going forward, since rate cuts are expected to start in 2024, I foresee some consolidation (now overbought on RSI) before breaking past $100 and to $105.

 

Solana (SOL) – Did not expect Solana to hit my target so fast, already up +50% profit from our buy price! 😎🔥💪

Revised the target upwards because it looks like the early stages of a bull trend.

 

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Market Recap & Upcoming Week

As 2023 draws to a close, the financial markets are exhibiting a strong performance, with stocks nearing yearly highs and bonds making a significant recovery after a challenging period.

The positive trend in the markets this year can be attributed to several factors: easing inflation, a resilient economy that has maintained above-average growth without succumbing to a recession, and growing enthusiasm around artificial intelligence (AI). Looking ahead to 2024, investors are hopeful about the Federal Reserve shifting from a restrictive policy to a more neutral stance, potentially leading to rate cuts.

This anticipated policy change is expected to act as a catalyst for further gains in both bond prices and equity markets, broadening market leadership.

In terms of labor market dynamics, there was a mixture of data last week. While the U.S. economy added 199,000 jobs in November, slightly more than expected, the labor market is showing signs of cooling, which could lead to a more balanced demand and supply for workers in 2024.

Inflation rates have also been falling faster than the Fed’s projections, with core personal consumption expenditures index (PCE) already down to 3.5%, below the Fed’s estimated year-end figure.

This deceleration in inflation, combined with the low unemployment rate and strong consumer demand, suggests a potential soft landing for the economy.

As for economic growth, it’s predicted to slow down from its current above-trend pace, influenced by factors like depleted excess savings and higher effective mortgage rates.

The upcoming Fed meeting and economic projections are expected to shed light on future rate paths and could introduce some volatility in the markets.

However, there’s a growing sentiment that 2024 might see the Fed implementing rate cuts to support the economy, potentially leading to the 10-year Treasury yield dropping below 4% by the year’s end.

This week, attention is centered around the Federal Reserve’s interest rate decision on Wednesday, with widespread anticipation that rates will remain unchanged.

The decision will be followed by a press conference with Fed Chair Jerome Powell, offering insights into the central bank’s future monetary policy direction.

Additionally, key inflation data is set to be released, starting with the Consumer Price Index (CPI) on Tuesday, providing a snapshot of price trends.

The Producer Price Index (PPI) will be announced on Wednesday, giving further clarity on business wholesale prices and contributing to the overall picture of inflation dynamics.

In the tech sector, a smaller batch of earnings reports is on the horizon as earnings season winds down.

Oracle’s financial results, due Monday, are expected to shed light on the current demand for cloud and tech products. Adobe’s earnings report on Wednesday is anticipated to reveal how well its new AI products are resonating with consumers.

Meanwhile, Intel is gearing up to unveil its latest AI-focused offerings in a launch event, offering a glimpse into the evolving landscape of chip design for artificial intelligence applications.

 

Daily Trading Signals (Highlights)

BTCUSD Crossing 40032
First TP of $40,000 hit!

 

Bitcoin (BTCUSD) – Following up on this trade, it has now broken the $40,000 resistance level, and we are up +60% profit! 💰🔥💪🏻

I have revised the target profit to gun for $50,000 next, given how strong the momentum is.

 

Solana (SOL) – Prices have gone up about 25% since the breakout, congrats! 💰🔥💪🏻

 

EURCHF – Target hit with +200 pips profit! Congrats to all those who took this trade! 💰🔥💪🏻

 

 

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