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December 14, 2023


What a day for the Dow Jones Industrial Average! The index closed at a record high of 37,004.61. This is the first time ever that the Dow has crossed the 37,000 mark, and it shows no signs of slowing down. What’s behind this remarkable rally? How long can it last? And what does it mean for your investments? Read on to find out.


Today’s edition is sponsored by Marketbeat, our partner in providing you all news and market insights.


But that’s not all. We also have our Chart of the Day, News that moved the market on this historic run, sprinkled with random fun along the way.


So sit back, relax, and get ready for a dose of Traders on Trend. We promise you won’t regret it. 😉


Today's Market Mood: EXTREMELY BULLISH!

The Bear-Bull Meter


Daily Market Roundup and Strategy


Wall Street just went full confetti cannon! The Dow Jones soared to a record-shattering close above 37,000, fueled by the Fed's oh-so-sweet promise of a dovish dance in 2024. Turns out, all it took was a gentle "no" to a rate hike and a whisper of future cuts to send investors into a sugar-rush frenzy.


The Fed might be playing coy about keeping their options open, but their message was clear: inflation's getting tamed, the economy's doing a tap-dance on the tightrope (without falling off, hopefully), and rate hikes? Well, let's just say they're officially on hold, like a vacationing politician's Twitter account.


So, what does this mean for you? Here’s a few key takeaways:


1. Growth on the Horizon: The Fed's dovish tilt paints a sunnier picture for economic growth in 2024. Smaller companies, those most vulnerable to economic chills, basked in this optimism, sending the Russell 2000 on a joyous three-and-a-half-percent jaunt.


2. Banks are Back in the Game: Lower rates mean fatter profit margins for our financial friends. Banking stocks did the Macarena, with the KBW Regional Banking Index reaching its highest level in months. Talk about a financial fiesta!


3. Bond Yields Take a Tumble: The 10-year Treasury yield did a belly flop, diving to a four-month low just above 4%. This means borrowing costs could cool down, potentially making investments in things like real estate and infrastructure more attractive.


4. Volatility Takes a Backseat: Remember the VIX, that ever-present harbinger of market jitters? It barely budged, staying comfortably below 13. Looks like fear is taking a well-deserved vacation.


What now?


Keep your portfolio diversified: Don't put all your eggs in the growth basket. With a mix of stocks, bonds, and other assets, you'll be ready to weather any market tango.


Stay nibble-y: Don't jump in headfirst. The market might still have a few surprises in store. Wait for good entry points and avoid emotional investing.


Focus on fundamentals: Don't get caught up in the hype. Research companies, understand their business models, and make informed decisions based on long-term potential.


Remember, the market's a fickle beast, and even sunshine can't last forever.


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Market Mischief


Dow Jones Discovers Anti-Gravity Boots?


With the Dow soaring past 37,000, Wall Street analysts are scrambling for explanations. Did the Fed accidentally inject pure optimism into the market? Did someone spike the coffee with bullhorn serum? Or, as some whisper, did the Dow finally discover a pair of anti-gravity boots?


Only time will tell if this rally defies the laws of physics or comes crashing back down to earth. One thing's for sure: this market's doing the moonwalk!


Chart of the Day

Gas Prices Take a Downward Drive!


In our Chart of the Day, we're looking at a trend that's giving wallets a breather: gas prices gearing up for a more budget-friendly year. After a summer where prices soared to the highest in a decade, like a hot air balloon ride no one asked for, the cool-down has come just in time to give consumers—and the Fed—a moment of respite.


Now, before you break out the celebratory confetti, remember this: retail prices often lag behind futures by a month or two. So, while the future looks bright (and cheap!), keep your foot off the gas pedal and expect a gradual, not instant, descent at the pump.


Bonus Round: Want to play market Nostradamus? Track RBOB gasoline futures. If they stay low, expect retail prices to follow suit. And remember, diversification is key! Don't put all your financial eggs in the gas basket. Spread your investments across sectors and asset classes to weather any market storm.

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Dow Vaults into 37,000, for the First Time Ever!


Wow, just wow. 

The Dow Jones just did the unthinkable – it blasted past 37,000, marking a record-breaking high and officially ushering in a new bull market. This isn't just confetti-worthy news; it's a signal that investor confidence is back, fueled by a potent cocktail of easing inflation and whispers of future rate cuts from the Fed.


Why the Dow's Delight? Sure, financial professionals might scoff at the "granddaddy index," but for millions of Americans, the Dow remains the market's emotional compass. It's the gauge of optimism, the symbol of financial health, and today, it's flashing a neon green "bull market ahead" sign.


Remember that brutal dip back in September 2022? The one that left everyone clutching their portfolios like life rafts? Well, consider that a mere blip on the radar now. The Dow has surged 29% since then, a testament to the market's remarkable resilience and its uncanny ability to bounce back stronger.


While the Dow basks in its record glory, the broader S&P 500 still lingers a hair's breadth shy of its own peak. Don't let that dampen the party, though. This lag is just a technical quirk, a temporary detour on the road to recovery. The S&P will catch up soon enough, propelled by the same rising tide of optimism.


So, what does this mean for you? First, take a deep breath and savor the sweet scent of a bull market. It's not a guarantee of smooth sailing forever, but it's a welcome change from the choppy waters of recent months.


Second, stay informed. The Fed's rate-cut hints might sound like sweet music, but remember, the central bank still holds the conductor's baton. Keep an eye on their pronouncements, adjust your sails accordingly, and don't get swept away by the euphoria.


Finally, invest wisely. A bull market is a marathon, not a sprint. Choose your investments with a long-term perspective, focus on fundamentals, and don't get tempted by the siren song of short-term gains.



Market Moving News


In our Market Moving News, let's take a quick stroll down Wall Street where some stocks took a dive and others soared on the latest news.


Financials Dance to the Fed's Tune: Ally Financial and Capital One waltzed to the tune of a "cautious-to-in-line" upgrade from Morgan Stanley, their shares surging on whispers of slowing inflation and an end to rate hikes. Lower rates could mean happier wallets for low- and mid-income consumers, music to the ears of lenders.


D.R. Horton Builds on Sideways Forecast: Keefe Bruyette's "outperform" upgrade sent D.R. Horton higher, buoyed by expectations of a stable housing market in 2024. This sideways sashay could translate to market share gains and steady margins for the homebuilder, painting a bright picture for its future.


Incyte's Bones Get Some Love: Leerink Partners' "outperform" upgrade gave Incyte a boost, reflecting optimism over its treatments for bone marrow diseases. Investors seem to be feeling good about the biopharma's future, strengthening its position in the competitive healthcare arena.


Pfizer's COVID Cough Dampens Spirits: The pharmaceutical giant's full-year guidance missed the mark, with investors coughing up shares on the news of a sharp drop in COVID vaccine revenue. This earnings miss reminds us that even the biggest players can stumble, highlighting the importance of diversification.


Tesla Weathers Bug Storm: Despite reports of a two-million-vehicle recall to fix driver assistance system glitches, Tesla's stock held its ground. This resilience shows investors remain confident in the electric car pioneer's ability to navigate bumps in the road.


Dot-Plot Paints a Dovish Path: The Fed's latest economic projections sent a wave of optimism through the market. Expectations for slower GDP growth and a 75 basis point drop in rates in 2024 had investors dancing in the aisles. However, Powell's cautious tone reminded everyone that the inflation battle isn't over yet.


Rate Cut Gets a Faster Tempo: With the Fed potentially easing the pedal on rate hikes sooner than expected, traders are already pricing in a first cut as early as March. This quicker pace has the market humming with anticipation.


PPI Echoes Inflation Slowdown: The Producer Price Index remained flat in November, reinforcing the narrative of a gradual easing in price pressures. This data adds another layer of evidence to the Fed's dovish tune, keeping the market's ears perked up for further monetary policy adjustments.


Stay tuned for... Adobe's quarterly results after the market close and earnings reports from Costco and Lennar later this week!


Random Musings and the Time Machine


Something to Ponder...


  • The Dow hitting 37,000 is a milestone, but not a magic number. The index is just a collection of 30 stocks, not the whole market. Don’t get too attached to it, or any other number for that matter.
  • The Fed may be done with rate hikes, but not with policy changes. The central bank still has other tools to influence the economy, such as its balance sheet, its forward guidance, and its communication strategy. Pay attention to the signals, not just the actions.
  • Gas prices may be falling, but don’t expect a windfall. The savings at the pump may be offset by higher costs elsewhere, such as food, rent, or health care. Plus, lower gas prices may also mean lower demand for alternative energy sources, which could hurt the environment and the innovation sector.
  • Homebuilders may be optimistic, but not complacent. The housing market may be stabilizing, but it still faces many challenges, such as affordability, supply, regulation, and competition. Homebuilders need to adapt to the changing preferences and needs of the consumers, such as millennials, seniors, and immigrants.
  • Biotech stocks may be promising, but not predictable. The biotech sector is driven by innovation, but also by regulation, competition, and litigation. Biotech stocks can soar or sink based on clinical trials, FDA approvals, patent disputes, and mergers and acquisitions. Invest with caution, and diversify your portfolio.


On this day in history, December 14:


  • On December 14, 1799, George Washington, the first president of the United States and a major landowner, died at his Mount Vernon estate in Virginia. He left behind a legacy of leadership, patriotism, and civic virtue, but also a debt of $20,000, which was a lot of money back then.
  • On December 14, 1911, Roald Amundsen, a Norwegian explorer, became the first person to reach the South Pole, beating his British rival Robert Scott by five weeks. He planted the Norwegian flag and named the site Polheim, meaning “home of the pole.”
  • On December 14, 1962, the Mariner 2 spacecraft, launched by NASA, flew by Venus and became the first spacecraft to successfully explore another planet. It transmitted data on the temperature, pressure, and magnetic field of Venus, revealing that the planet was very hot, dry, and hostile to life.
  • On December 14, 1984, the British pound was allowed to float freely against other currencies, ending the government’s intervention to support its value. The move was part of the economic reforms initiated by Prime Minister Margaret Thatcher, who aimed to liberalize the financial sector and reduce inflation.
  • On December 14, 2012, a gunman killed 20 children and six adults at Sandy Hook Elementary School in Newtown, Connecticut, in one of the deadliest mass shootings in U.S. history. The tragedy sparked a national debate on gun control, mental health, and school safety, but no major legislation was passed.

The Final Ledger


That’s all for today’s edition of Traders on Trend, the newsletter that keeps you on top of the market trends and movements. We hope you enjoyed reading it and learned something new. Before we sign off, here’s a funny quote to end the day:


October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” - Mark Twain


Have a great day and happy trading! 😊