Blog: Market Analysis

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For subscribers of our “Daily Trading Signals”, we now also include a “Weekly Market Report”, where we provide a weekly deep-dive on the market, including fundamentals, technical, economics, and portfolio management:

Market Recap & Upcoming Week

Last week’s December FOMC meeting was a significant event for financial markets, marked by three major developments. Firstly, the Federal Reserve’s new “dot plot” indicated a likelihood of three rate cuts in 2024, more than previously expected, with a forecast of bringing the fed funds rate to 2.9% by 2026.

This change in the Fed’s stance, from rate hikes to potential cuts, was a positive signal for markets, leading to speculation of up to six rate cuts next year. The market’s response was optimistic, as evidenced by rising stock and bond prices.

In addition to the rate cut projections, the Fed’s outlook on employment was also notable. They forecast a steady unemployment rate of 4.1% through 2026, despite expectations of cooler economic growth and moderating inflation.

This scenario, often termed a ‘soft landing,’ suggests a balanced economy without significant job losses.

Fed Chair Jerome Powell’s comments further reinforced the notion that inflation doesn’t need to hit 2.0% for rate cuts to commence, hinting at a more proactive approach in adjusting monetary policy.

With the current fed funds rate at 5.25% – 5.5% and moderating inflation, real interest rates are becoming increasingly restrictive, paving the way for a gradual reduction in rates to support economic growth and market stability.

This week in the stock markets, which have been on an upward trend for seven weeks, will operate on a normal schedule ahead of the holiday season.

Investors and market analysts will be closely monitoring the release of the Personal Consumption Expenditures (PCE) index on Friday.

This key indicator will provide insights into whether inflation is maintaining its downward trajectory, a critical factor in shaping market sentiment and future monetary policy decisions.

In addition to inflation data, the focus will also be on the housing market with several important reports scheduled for release.

These include metrics on homebuilder confidence, housing starts, building permits, existing home sales, and new home sales. These indicators will offer a comprehensive view of the current state of the housing market.

Furthermore, the final Michigan Consumer Sentiment Index for December will be released, offering a glimpse into American consumer attitudes towards the economy at year-end.

On the corporate front, notable earnings reports are expected from major companies like Nike Inc., Accenture PLC, FedEx Corp., Micron Technology Inc., and CarMax Inc., which could influence market movements and investor strategies.

Daily Trading Signals (Highlights)

NASDAQ 100 (US100) – As predicted, the breakout has started! 💰🔥💪🏻

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Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.

Weekly Market Wrap: BTC & ETH Breakout, Crypto Season is Back!

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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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Weekly Market Wrap: Gold and Crypto Broke New Highs!

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Market Recap & Upcoming Week

Last week saw the stock market continue its impressive comeback in 2023, with gains nearing 20% this year, a stark contrast to the struggles of 2022.

The momentum was particularly strong in November, marking the first monthly gain for the S&P 500 since July.

This rally was fueled by a combination of factors: inflation showing a downward trend, the Federal Reserve hinting at a halt in policy tightening, resilient economic performance despite high interest rates, and corporate earnings exceeding expectations. The robust November rally, backed by solid economic data, suggests a promising end to 2023 and potential for sustained growth into 2024, even as challenges loom.

In terms of market performance, U.S. stocks soared by 9% in November, marking the best month in over a year and a half and ranking as one of the top monthly returns in the last 30 years. This surge erased the downturn experienced from August to October, driven by renewed interest rate concerns.

Market leadership was largely from cyclical sectors and those sensitive to interest rate drops, including small-cap stocks and sectors like financial services, consumer discretionary, technology, and real estate. With the S&P 500 inching closer to its all-time high from January 2022, the outlook for the next year, despite expected challenges, leans towards a likely return to new highs and potential double-digit returns.

Investment-grade bonds also saw a significant upswing, logging their best monthly return in three decades, buoyed by a less restrictive Fed outlook.

This week, the focus for market observers will be primarily on the labor market, with several key reports scheduled for release. The week will kick off with data on job openings, providing insights into the current employment landscape.

This will be followed by the ADP private payroll report on Wednesday, which is often viewed as a precursor to the broader employment situation. Thursday brings the weekly initial jobless claims, a timely indicator of short-term employment trends.

The culmination of labor market reports will be the U.S. unemployment report on Friday, which is pivotal for understanding the overall health of the labor market and could influence market sentiments significantly.

In addition to labor market data, investors will be keenly awaiting other economic updates throughout the week. These include the latest figures on factory orders and revisions to U.S. third-quarter productivity, which offer a glimpse into the industrial sector’s performance and overall economic efficiency.

On the consumer front, the Federal Reserve’s report on consumer credit and the preliminary December results from the Michigan Consumer Sentiment Index will shed light on consumer financial health and confidence levels.

In the tech sector, a notable event is the launch of Advanced Micro Devices’ (AMD) new MI300 data center GPU chip on Wednesday, highlighting the ongoing advancements in AI-focused chip designs. Additionally, tech giants Microsoft (MSFT) and Cisco Systems (CSCO) will be conducting their annual shareholder meetings, potentially impacting their respective stock movements and broader market trends.

Daily Trading Signals (Highlights)

Gold (XAUUSD) – Since our last post, gold prices have gone up, and are now testing the all-time highs. Waiting for a new bull run soon! 💪🏻

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Weekly Market Wrap: Will there be a Santa Rally this Christmas?

Click here to subscribe for the latest market report (27 November 2023)
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Market Recap & Upcoming Week

Last week marked a period of gratitude and reflection, coinciding with Thanksgiving 2022. Despite the stock market being down 16% for the year, 2023 has witnessed a more robust market, stirring investor optimism.

Historically, the stock market has performed well post-Thanksgiving, with an average December return of around 1% over the last 30 years. This trend, coupled with the market’s recent upswing, suggests a possible continuation of gains. Since 1950, the market has often seen significant gains in years following a strong performance leading into Thanksgiving.

The stock market’s recent rally can be attributed to several factors. Key among them is the ongoing moderation in inflation, with the October Consumer Price Index (CPI) decreasing to 3.2% year-over-year. This trend of lower inflation has played a significant role in driving Treasury bond yields down, thus fueling the market’s upward momentum.

Additionally, the Federal Reserve’s more moderate stance on interest rates, as evidenced in the November FOMC meeting, has boosted market confidence. Furthermore, a gradual cooling in the economy, marked by slightly higher jobless claims and lower retail sales, seems to be aiding the rally without triggering recessionary fears.

The small-cap stocks, particularly the Russell 2000, have underperformed compared to the S&P 500 but might offer investment opportunities as the economy shows resilience amidst slowing growth and declining inflation.

This week in the financial markets, attention will be focused on a range of key economic data releases, with the spotlight on the latest inflation figures.

The Personal Consumption Expenditures (PCE) index is particularly significant as it provides insights into the effectiveness of the Federal Reserve’s inflation-fighting measures through interest rate hikes. This data is crucial for the upcoming Federal Open Market Committee (FOMC) meeting on December 12-13, which will be pivotal in determining future interest rate decisions.

Alongside inflation data, other important economic indicators due for release include new home sales, the September home-price index, October’s new and pending home sales, and the consumer confidence index for November. Additionally, the markets are anticipating the first revision of the U.S. Gross Domestic Product for the third quarter.

In the earnings arena, a series of reports from major companies across tech, finance, and retail sectors are expected. Notable among these are Salesforce, Intuit, Workday, Crowdstrike, Dollar Tree, and Five Below, each poised to provide further insights into the health and direction of their respective industries.

Daily Trading Signals (Highlights)

Palantir Technologies (PLTR) – Prices have hit our TP a few days ago, congrats to those who took this trade! 💰🔥💪🏻

If prices hold above the breakout, we could see a consolidation and then a resumption of the uptrend.

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Weekly Market Wrap: Will We See New All-Time Highs in the Stock Market this Year?