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December 11, 2023
Happy Monday and welcome to the fresh start of the week with today's edition of Traders on Trend! As we step into 2024, it's not just about embracing a new week; it's time to scribble down some serious New Year's resolutions.
And who better to lead the charge than top Wall Street strategists? Today, we're peeling back the layers of their investment resolutions, promising to keep things as intriguing as a mystery novel but with better financial advice.
Also in today's newsletter, we'll also bring you our Weekly Wrap – a concise yet comprehensive look at the week that was. And, for a visual treat, don't miss our Chart of the Day, breaking down complex data into an easy-to-digest visual.
A big thank you to Marketbeat for backing us today. Ready to start the week on a high note? Let's get to it! 📊📈🌞
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Today's Market Mood: EXTREMELY BULLISH!
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The Week That Was:
Last week, we saw major indices nudging upwards, with the Russell 2000 showing some muscle, up about 1%. Remember our talk about a potential shift towards underdogs like the RUT? Well, that narrative continued, but tech also caught the investment wave, thanks to a renewed zeal for AI.
Alphabet revealed Gemini, their new AI system, and AMD isn't far behind with their MI300 AI chips. These tech titans are not just raising the AI bar; they're potentially doubling their AI data center chip revenue forecasts. This AI frenzy is a cornerstone for bullish investors, hinting at justifying heftier tech valuations.
Labor market data, however, showed a bit of a shuffle. Job openings dropped, indicating a bit of slack. Yet, the Nonfarm Payrolls report and a dip in the Unemployment Rate suggest the labor market isn’t ready to take a back seat just yet.
Outlook for Next Week:
With the SPX lingering near key resistance at 4,600, next week promises to be anything but dull. We're eyeing several potential catalysts including CPI, PPI, and the FOMC. The bond market might be in for a rollercoaster, especially with yields on the 10-year ticking up post the Nonfarm Payrolls report. My take? Brace for a “breakout” in the SPX – we're talking a move of over 1.0% in either direction.
Economic Indicators and Earnings to Watch:
Keep your eyes peeled for a buffet of economic data next week, from CPI and PPI reports to the FOMC Rate Decision. The earnings calendar is also bustling, with big names like Oracle and Adobe set to reveal their financial health.
Economic Data, Rates & the Fed:
The JOLTS report and a dip in continuing claims add some texture to our labor market view. It's a mixed bag – suggesting some volatility ahead but not outright doom. Also, the revision in Productivity and unit labor costs could be music to bullish ears.
On the yields front, the 10-year Treasury had a bit of a yo-yo week, hitting a three-month low before bouncing back up. This movement might hint at a market recalibrating its expectations on the Fed's moves next year.
Speaking of the Fed, the likelihood of a rate cut in March has been slashed nearly in half. While no bombshells are expected at next week’s meeting, never underestimate the power of Fed Chair Powell's words to stir the pot.
Strategies for Traders:
With a week chock-full of economic data and earnings reports, agility is key. Keep a close eye on tech, especially AI-focused stocks, as they seem to be the darlings of the moment. Bond market volatility could offer opportunities, but caution is the word. And don’t ignore the Fed's every whisper – it could be the nudge that sets the market on a new trajectory. Stay informed, stay nimble, and let's see where the next week takes us! 📊🧐🚀
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Russel 2000: Boink or Breakout?
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In today's Chart of the Day, the Russell 2000 looks like it's deciding whether to dance to a bullish beat or sit this one out. After a spirited move, it’s tapping the brakes near a duo of blue lines – one trending down, the other flat as a board, both suggesting a tussle between buyers and sellers is brewing.
Bulls are eyeing a nifty consolidation, hoping to gather steam and vault over that upper blue line. It's like waiting for the kettle to whistle – patience is key, and so is a simmer rather than a rolling boil on volume.
On the flip side, the bears are licking their chops, ready to declare the party over if we see a volume spike on the descent. If that's the case, the Russell could be taking a nosedive, and we might just see it in freefall for the remainder of the year.
Traders, keep your eyes glued to this high-stakes standoff – will the bulls' hold firm, or will the bears' growl send the market scurrying? Stay tuned. 📊💪🐻
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Why don't stock market investors like weekends?
Because they can't enjoy their favorite hobby: gardening... I mean, watching their stocks grow! But even the markets need to catch some Z's—after all, you can't climb the charts without some rest. 🙃
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2024 Investor Guide: New Year Resolutions from Wall Street's Finest
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Today, we have maestros of market strategy put forth their investment resolutions for 2024, and the theme is clear: adaptability, meticulousness, and a keen eye on the underdogs of the market are paramount.
Amidst the aftershocks of a post-pandemic economy and Federal Reserve maneuvers, investors are learning that the only constant is change, and even the best-laid plans must be dynamic.
Deutsche Bank's Matthew Luzzetti paints a picture of an economy teetering on the edge of anticipation, with predictions of recession not yet materialized, highlighting the unpredictability that investors must navigate.
Keith Lerner from Truist emphasizes an evidence-driven approach, urging investors to avoid setting their strategies on cruise control. He underscores the vitality of staying nimble, adjusting as the narrative unfolds, particularly spotlighting technology and large caps, with a watchful eye on small caps for future treasure hunts.
From Charles Schwab, Liz Ann Sonders champions disciplined risk management, advocating for steering clear of unprofitable ventures – the so-called 'zombie companies'. Her advice? Favor quality, diversify, and rebalance, especially given the mixed profitability within indexes like the Russell 2000.
Brent Schutte of Northwestern Mutual reminds us that diversification remains your portfolio's best friend. He envisions a shift in market leadership, suggesting that small and mid-cap companies could be the dark horses ready to gallop ahead.
As we synthesize the wisdom of these sages, the narrative is clear: The markets in 2024 demand a blend of agility and scrutiny, with a dash of courage to bet on potential market shifters.
For traders, the way forward involves a balance beam walk between data dependence and strategic foresight. Let's sharpen our focus and prepare to pivot with precision as the market ebbs and flows.
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Random Musings and the Time Machine
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Did you know?
- Sher Shah Suri, hailed as the "Just King", was more than just a fair ruler.
- Before the ribbons were cut, Wawa Airport was already soaring with its first commercial flights.
- Jordan Love, in a rare feat, joined the exclusive Green Bay Packers' Week 1 starting QB club in 2023, alongside legends Brett Favre and Aaron Rodgers.
- The elusive volcano Lautaro was finally pinpointed, thanks to the eagle-eye of aerial imagery.
- Noah, a young British prodigy, painted the town (and more) as the backdrop artist for global stars like Ed Sheeran.
- Kristian Bush, a country music maestro, rang in his 52nd year with a symphony of 52 songs.
- Annie Rauwerda's stew simmered beyond two months, togther with 300 culinary collaborators.
On this day in history, December 11:
- 1789: The University of North Carolina at Chapel Hill, a trailblazer in public education, was chartered.
- 1886: Arsenal Football Club, then a modest Dial Square, kicked off its journey on the Isle of Dogs.
- 1920: The Irish War of Independence escalated as British forces retaliated with fire and fury in Cork, following an IRA ambush.
- 2006: The controversial Tehran conference, dubbed a "Holocaust denial forum", stirred global outrage.
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As we close the ledger on today's Traders on Trend, remember the words of the illustrious investor Warren Buffett: "The stock market is designed to transfer money from the Impatient to the Patient."
Whether you're eyeing those small-cap sprints or settling in for the large-cap marathon, let patience be your portfolio's virtue. Until tomorrow, may your investments be as steady as an oil rig on a caffeine-free Monday! Happy trading!
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