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Market Recap & Upcoming Week

2023 concluded with a minor pause in the stock market’s robust upward trajectory.

Despite the S&P 500’s moderate decline last week, the year was marked by a notable 16% rally in its last two months.

This pullback is attributed to early-year portfolio repositioning and a natural consolidation after such a substantial climb.

In the broader context, the outlook for 2024 is tinged with optimism, driven by expectations of favorable Federal Reserve interest rate decisions and a steady economic trajectory.

Nonetheless, the spirited rally into the new year has heightened expectations, potentially setting the stage for market sensitivity to any disappointing developments.

Fresh data on Federal Reserve policy intentions and labor market health emerged last week, indicating a resilient jobs market with a significant addition of 216,000 positions in December, maintaining a stable unemployment rate of 3.7%.

Despite this strength, a gradual softening is anticipated, marked by a reduction in job openings and moderated wage growth, which may temper consumer spending without pushing the economy into a recession.

Meanwhile, the Fed’s December meeting minutes suggest that while interest rate cuts are on the horizon, the market’s anticipation for an early-year cut may be overly optimistic, with policymakers erring on the side of caution and potentially postponing cuts until mid-2024.

Such a cautious approach could lead to short-term market volatility, viewed by some as a potential investment opportunity in anticipation of a supportive shift in Fed policy later in the year.

Investors entering the first complete trading week of 2024 should keep an eye on crucial economic indicators, with inflation data taking center stage.

The Consumer Price Index (CPI) from the Labor Department, a key measure of inflation for consumer goods and services, is scheduled for release on Thursday.

This will be closely followed by the Producer Price Index (PPI) on Friday, which provides insights into wholesale inflation and potentially signals future consumer price trends.

In addition to inflation data, the week will be significant for financial sector watchers as major banks begin to disclose their earnings.

Reports from industry heavyweights like JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, and BNY Mellon will offer a snapshot of the banking sector’s health and set the tone for the earnings season.

Other important data slated for release include consumer credit figures, the federal trade deficit, wholesale inventories, and the National Federation of Independent Business (NFIB) Small Business Optimism Index, each contributing to a fuller picture of the current economic landscape.

Daily Trading Signals (Highlights)

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Spencer Li

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.



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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.

Join our community for real-time alerts and weekly videos:
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Spencer Li

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.