Why this Market Rally is ‘the weirdest bull run in decades’?

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December 28, 2023


Dust off your rose-colored glasses, because the market's defying logic like a Mad Hatter tea party! Experts are scratching their heads at this "weirdest bull run in decades," and we're diving in headfirst to untangle the magic (or maybe just the mayhem).


Today's newsletter, powered by MarketBeat – your finance Cheshire Cat guiding you through this Wonderland, is packed with market madness, Disney drama ( those box office numbers!), and enough trivia to make even the Queen of Hearts blush.


So grab a thimble of courage and join us on this rabbit hole of a ride – it's gonna be anything but ordinary!


Today's Market Mood: EXTREMELY BULLISH!

The Bear-Bull Meter


Daily Market Roundup: A Holiday Hangover or a Bullish Brilliance?


While Santa might be tuckered out after his whirlwind gift-giving tour, the market certainly isn't ready to call it a year just yet. The Dow Jones, fueled by whispers of rate cuts and economic optimism, moved to another all-time high, leaving other indices feeling a tad FOMO-ish. But before you break out the bubbly, let's take a closer look at this holiday hang-over market.


The Big Picture:


Dow Jones: Soaring like a reindeer on Red Bull, the Dow hit a record high, fueled by whispers of future Fed rate cuts and a potential economic soft landing.


S&P 500: Inching closer to its January peak, the S&P followed suit, but with a more subdued swagger. It seems some investors are taking a "wait and see" approach before diving headfirst into this festive frenzy.


Nasdaq: Not to be left out, the Nasdaq joined the party, but with a more measured two-step. Tech stocks seem content to let the Dow do the heavy lifting for now.


What's Driving the Engine?


Fed Whisperings: Like elves in Santa's workshop, dovish whispers about future rate cuts are music to investors' ears. The possibility of multiple cuts in 2024 is acting like sugar plum fairies, sprinkling optimism on the market.


Soft Landing Symphony: The potential for a "soft landing" for the economy is also attracting investors. It seems the fear of a Grinch-like recession is fading, making holiday cheer a bit more bubbly.


Treasury Tune-Down: Treasury yields hitting five-month lows are like mistletoe for investors seeking higher returns. This suggests the peak in U.S. interest rates might be behind us, further fueling the bullish bonfire.


Holiday Hiccups:


Profit-Taking Pause: It wouldn't be the holiday season without a bit of family drama, and the market is no exception. After two months of a relentless rally, some investors are cashing in, causing a slight profit-taking hiccup.


Quiet Week: With earnings and economic news thin on the ground, the market is in a holding pattern, waiting for the adrenaline rush of next week's data blitz.


What's Next?


Next week, the market will be treated to a post-holiday data buffet, featuring the all-important jobs report and other economic indicators. This will set the stage for the Fed's next dance moves on interest rates. So, fasten your seatbelts, because the market rollercoaster is about to pick up the pace!




Embrace the Dip: With some profit-taking expected, don't be afraid to use market dips as an opportunity to snag some bargains.


Stay Diversified: Remember, even Santa brings a variety of toys. Keep your portfolio diversified across sectors and asset classes to weather any unexpected market blizzards.

Keep Calm and Carry On: Don't let the holiday market jitters get the better of you. Stick to your long-term investment strategy and remember, even the Grinch can't steal your financial future.


While the market might be taking a breather after its holiday shopping spree, don't be fooled by the quiet. This bull is far from exhausted, and next week's data could be the fuel for its next charge. Stay informed, and stay tuned for more market insights in the coming days. Happy holidays, and happy trading!


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Market Mischief: Ho-Ho-Hold Your Horses, Traders!


The market's been on a sugarplums-and-champagne bender lately, fueled by whispers of Fed rate cuts sweeter than grandma's eggnog. But before you start planning your tropical island getaway with your stonks profits, remember – the Fed could be the Grinch lurking in the chimney, ready to steal your gains with a surprise rate hike.


Keep your eyes peeled on the Fed's naughty list and your portfolios diversified – just in case Santa's little helpers decide to throw a coal-fueled tantrum in 2024. And if you need a distraction from the potential market mayhem, remember – the first-ever stock market crash was triggered by tulip bulb speculation! Talk about a Dutch disaster! Now that's a story worth sipping hot cocoa over.


(Bonus tip: Invest in some stress balls – they'll come in handy when the Fed decides to play its rate-hike jingle next year.)


Chart of the Day

$DIS: Is Mickey's Mouse House Facing a Main Street Meltdown?



DIS stock has been stuck in a post-pandemic limbo since mid-2021, and whispers of further downside are swirling louder than the Haunted Mansion's ghosts. Let's unpack the bearish whispers:


First, we have the stubborn resistance lurking at $96.51. Remember that peak back in November? Turns out, it's become a roadblock, refusing to let the price climb any higher. It's like old support turned grumpy gatekeeper, guarding the castle with crossed arms.


Second, those lower highs are playing peek-a-boo. DIS keeps inching towards that November 14th close of $91.07, but then skitters back down – forming a descending triangle that's about as optimistic as Maleficent on a good hair day.


Third, the 200-day SMA is acting like a grumpy, long-term landlord. DIS is flirting with this trendline, and a dip below could be the eviction notice investors dread.


Fourth, the technical indicators are flashing amber alerts. The 8-day EMA's nosediving like a lemming off a cliff, and the MACD is tumbling faster than a dropped ice cream cone on a hot summer day. Not exactly party vibes.


Fifth, the box office bombs aren't exactly helping. Turns out, not even Mickey's magic touch can guarantee every live-action remake turns into box office gold.


So, is DIS headed for a Peter Pan-style tumble? Maybe, maybe not. This is just one snapshot. Do your research, consult your financial advisor, and remember, fortune favors the prepared, not the overly attached popcorn bucket holders.


There you have it, the Disney drama laid bare. Now, let's see if this story ends with a happily ever after or a "Be Our Guest" for the bears. Stay tuned!


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The S&P's Split Personality: Bull Market for Some, Snoozefest for Others


Even experts have no idea. 

The S&P 500 is on track for another record high, but scratch beneath the surface and you'll find a curious tale of two markets. While the headline index flirts with all-time peaks, most stocks have been left in the dust, creating a "weirdest bull market in decades," as some analysts aptly call it.


Think of it as a victory lap for a select few Olympians, while the rest of the track team watches from the sidelines. A staggering 72% of S&P 500 stocks are actually underperforming the index this year, a record-breaking level of divergence. This "bad breadth," as Wall Street calls it, paints a picture of a market lopsidedly driven by a handful of megacap winners, the so-called "Magnificent Seven" – Apple, Nvidia, Tesla, Amazon, Microsoft, Alphabet, and Meta.


Fueled by the AI boom and their sheer size, these giants have propelled the S&P 500 a whopping 24.4% higher in 2023, while their equal-weight counterparts in the Invesco S&P 500 Equal Weight ETF (RSP) manage a much humbler 11.8% gain. It's like comparing Usain Bolt's gold medal dash to everyone else's leisurely jog.


But here's the twist: as whispers of multiple Fed rate cuts in 2024 fill the air, even the laggards are showing signs of life. The gap between RSP and the S&P 500 is narrowing, hinting at a potential comeback for the also-rans. It's like the marathon runners finally finding their pace, the finish line still a way off, but the gap to the leaders slowly closing.


So, is this the start of a broad market rally, or just a blip on the radar? The answer, like most things in finance, is nuanced. While the "Magnificent Seven" might still dominate the headlines, a broader market resurgence can't be entirely ruled out. Keep an eye on RSP's "golden cross" – the technical term for its 50-day moving average crossing above its 200-day counterpart. If that happens, it could be a signal that the rest of the market is finally joining the party.


One thing's for sure: this bull market is far from ordinary. It's a tale of winners and losers, of narrow rallies and potential comebacks. Buckle up, folks, because the next chapter of this market marathon is about to unfold.



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.


  • Coherus BioSciences (CHRS) soared nearly 24% after the FDA gave the green light to its Udenyca Onbody, an on-body injection system used with chemotherapy to prevent infection.
  • Iovance Biotherapeutics (IOVA) plunged nearly 19% after the company said the FDA put a "clinical hold" on its trial for LN-145, a therapy for non-small-cell lung cancer.
  • New York Times Co. (NYT) gained nearly 3% after the report that the newspaper giant sued Microsoft (MSFT) and ChatGPT, a subsidiary of OpenAI, for allegedly infringing its copyright and using its intellectual property to train large language models. Microsoft shares slipped about 0.2%.
  • Tesla (TSLA) rose nearly 2% after Bloomberg News reported that the electric car maker has some upgrades planned for its Model Y in 2024. 


Waiting for jobs update


The economic calendar gets busier on Thursday, with reports on U.S. Initial Weekly Jobless Claims, November Retail and Wholesale Inventories, and Pending Home Sales on tap.


Jobless claims have been near historic lows in recent months, indicating a solid labor market despite slower job growth and fewer job openings. Analysts expect weekly claims of about 207,000, based on a Briefing.com consensus, which would be slightly higher than 205,000 last week.


Another part of the Labor Department's weekly claims report, continuing claims, will also be watched for signs of the job market's direction in 2024. Continuing claims have been rising lately, implying that it's taking longer for the unemployed to find new jobs. Last week, continuing claims totaled 1.865 million, just below recent two-year highs.


Next week, investors will welcome the new year with several key economic reports, topped by the Labor Department's December Nonfarm Payrolls report on January 5. The monthly job numbers have surprised to the upside several times this year, and any positive surprises next week could make investors rethink their expectations for Fed rate cuts.


The Fed's latest economic forecast earlier this month suggested that its benchmark funds rate may be cut by 75 basis points in 2024, equivalent to three quarter-point cuts. The market, however, seems to be pricing in more than three.


Late Wednesday, futures traders assigned roughly 81% odds that the Federal Open Market Committee (FOMC) will keep its benchmark funds rate target unchanged at 5.25% to 5.5% after its January 30–31 meeting, according to the CME FedWatch Tool. The market expects a 90% chance that the funds rate will be at least a quarter point lower after the Fed's March meeting.


Other reports next week include Construction Spending on Tuesday and the Institute for Supply Management's (ISM) Manufacturing Index on Wednesday. The markets are closed on Monday for New Year's Day.



Random Musings and the Time Machine


Something to Ponder...


- If you think the market is weird, consider this: there is a town in Norway called Hell, and it freezes over every winter.


- The word "dollar" comes from the German word "thaler", which was a silver coin used in Europe in the 16th century. The word "thaler" itself comes from the name of a silver mine in Bohemia, called Joachimsthal.


- The longest word in the English language that can be typed with only the left hand on a QWERTY keyboard is "stewardesses".


- The most expensive painting ever sold at auction was Leonardo da Vinci's "Salvator Mundi", which fetched $450.3 million in 2017. The buyer was reportedly a Saudi prince, who later gave it as a gift to the Louvre Abu Dhabi.


- The first stock exchange in the world was established in Amsterdam in 1602, by the Dutch East India Company, which was also the first company to issue shares to the public.




On this day in history, December 28:


- On this day in 1895, the Lumière brothers held the first public screening of their films in Paris, marking the birth of cinema.


- On this day in 1918, President Woodrow Wilson arrived in France, becoming the first U.S. president to visit Europe while in office.


- On this day in 1937, the Lincoln Tunnel, connecting New York City and New Jersey, opened to traffic.


- On this day in 1968, Apollo 8, the first manned mission to orbit the moon, was launched from Cape Kennedy, Florida.


- On this day in 1991, Mikhail Gorbachev resigned as president of the Soviet Union, ending the Cold War and paving the way for the dissolution of the USSR.



The Final Ledger


Today's market was a mixed bag – records and rallies for some, while others wallowed in the "haves and have-nots" blues. But remember, traders, in this investing game, patience is your poker face and diversification your ultimate cheat sheet.


As someonce once said, "The secret of successful investing is not to find the company that’s going to do the best, but to find the one that’s going to do the best for you."


Choose wisely, stay informed, and don't forget to cash in on those "golden cross" opportunities – this bull market might still have some surprises in its horns. Until next time, keep your portfolios plump and your trading spirits merry!



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