January 16, 2024

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Greetings Trendsters(I'm sticking to it)! We're tanned, refreshed, and ready to dive back into the market waters after a long weekend. 


While the headlines scream new highs, a 100-year-old indicator, Dow Theory, is frowning like a sandcastle under siege. This disconnect between the Dow Jones and its transportation cousin is raising eyebrows and sparking debate. Could it be a mere blip, or a warning sign on the beach?


Before we build our sandcastles, let's check the Chart of the Day: $COIN's potential inverse H&S neckline retest is a technical tide we can't ignore. Think of it as a wave testing the sand – a break could lead to deeper waters, but a surge could send it cresting towards sunny skies. 


Meanwhile, the market calendar is overflowing with potential riptides. Bank earnings this week might reveal cracks in the financial foundation, while economic data could stir up choppy waters. Plus, the Fed's whispers will have everyone hanging ten on market sentiment. And let's not forget the looming government shutdown – a rogue wave lurking on the horizon.


We'll navigate these currents with expert insights, witty banter, and maybe even a few shark-repelling puns. So grab your sunhats, adjust your goggles, and prepare to ride the waves with Traders on Trend!



Today's Market Mood: EXTREMELY BULLISH!

The Bear-Bull Meter


Daily Market Roundup - A Week of Big Moves and Big Questions


Welcome back from your well-deserved MLK weekend – hopefully, you're feeling refreshed and ready to tackle the market jungle with renewed focus. This week promises to be anything but calm, with lots of events ready to stir the pot. 


Bank Earnings Take Center Stage: The financial titans kick off the week with Morgan Stanley and Goldman Sachs stepping into the spotlight. Investors will be laser-focused on loan growth, trading revenue, and any hints about the economic horizon. Can these banking behemoths navigate the choppy waters and deliver stellar performances, or will their sails be left flapping in the wind?


Housing Market Under the Microscope: Brick-and-mortar enthusiasts, your attention is needed! Housing starts and existing home sales data take center stage this week. A robust housing market is the bedrock of economic prosperity, so any cracks in the foundation could send tremors through the broader landscape. Will construction crews keep hammering away, or will the housing market take a breather?


Fed's Symphony Plays On: The central bank maestros take the stage with Christopher Waller and Raphael Bostic conducting the economic orchestra. Their pronouncements will be closely scrutinized, searching for any clues about the tempo of future interest rate hikes. Will they maintain the current crescendo, or might a softer melody be on the horizon?


Retail Therapy or Retail Blues?: Consumer spending data is another crucial indicator on the docket. Did the holiday cheer translate into sustained shopping sprees, or are wallets starting to feel the pinch? A robust showing could boost confidence, while a muted performance might cast a shadow on the economic recovery. Will shoppers keep swiping their cards, or are they tightening their belts?


Davos Dreams and Global Realities: The World Economic Forum convenes in the Swiss Alps, bringing together political and business heavyweights to discuss the world's most pressing issues. From AI and climate change to global conflicts and economic uncertainty, the conversations in Davos will be worth eavesdropping on. Can these titans forge a path towards a brighter future, or will the discussions remain mere alpine echoes?


Shutdown Specter Looms: Don't forget the political drama! Congress has until Friday to avoid a partial government shutdown. Can they strike a deal and keep the gears of government grinding, or will the wheels fall off? This adds another layer of suspense to the week, so keep an eye on the political tango (okay, maybe not a tango... let's say waltz? No? Okay, moving on!).


Trading Strategies:

  • Sector Spotlight: With bank earnings and housing data in the spotlight, consider tactical plays in these sectors based on individual company and market trends.
  • Economic Jitters: Be prepared for potential volatility triggered by the Fed's pronouncements and retail spending data. Adjust positions accordingly.
  • Davos Insights: While not directly market-moving, the Davos discussions could offer valuable long-term perspectives. Keep an ear out for key themes.

This week promises to be a thrilling roller coaster ride (without the buckles, of course). Stay sharp, stay informed, and remember, in the market's ever-evolving story, the best investors are those who can adapt to the twists and turns with agility and foresight. So, grab your metaphorical binoculars, and let's explore the market jungle together!

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Market Mischief: Did Someone Order a Side of Dow Theory Drama?


Remember Dow Theory, that classic market indicator like your grandma's favorite cardigan – worn thin by time, yet surprisingly resilient? Well, this week, Dow and Dow Jones Transportation decided to stage a family feud, leaving investors scratching their heads. While the main Dow soared to new highs, its transportation cousin sputtered like a busted taxi, dragging the whole theory into the spotlight. Is this a temporary glitch, or a sign the market's wearing a mismatched socks of optimism and caution? Tune in this week for the next episode of "Dow Dynasty!"


(Bonus trivia: The first recorded instance of stock market speculation involved… tulip bulbs! In 1637, investors went Dutch for these exotic flowers, driving prices sky-high before the whole bubble burst, leaving everyone with wilted wallets and a lesson in financial folly.)



Chart of the Day

$COIN – Can This Phoenix Fly Again?


$COIN's chart presents a captivating puzzle today: an asymmetrical inverse Head and Shoulders formation. Imagine a mountain with a lopsided peak, and you've got the picture. The crucial test lies at the $106-$111 neckline, currently acting as a tightrope between potential glory and potential retreat.


If $COIN gracefully steps across, look for an upward climb towards the November '21 peak, basking in the sunshine of $350-$430. But a stumble below the neckline paints a different picture – a descent back into the market's depths, seeking further consolidation.


Remember, technical patterns are just clues, not crystal balls. Keep a close eye on price action and market sentiment as $COIN navigates this technical tightrope. Will it soar like a phoenix, or take a dip before its next flight? This chart's story is still being written, so stay tuned for the next chapter!


Bullish Boom versus Bumpy Tracks: Dow Theory Throws a Wrench in the Rally


The stock market's record-breaking sprint seems at odds with a century-old signpost: Dow Theory. While Wall Street celebrates fresh peaks, the Dow Jones Transportation Average, typically a trusty sidekick, lags a whopping 9% behind. This dissonance, according to Bank of America, throws a tactical curveball at the 2024 outlook.


Dow Theory's logic is simple: a prosperous economy means happy consumers buying stuff, which keeps transportation companies booming as they ferry the goods. But transportation stocks like FedEx and UPS are singing a different tune, offering less-than-rosy forecasts. Their sluggishness, in Dow Theory's book, paints a cautionary picture for the broader market.


For the bullish signal to truly hold weight, the Dow Transportation Average needs to catch up – a ten-percent leap to claim its own record high. Anything less, warns Bank of America, leaves the rally vulnerable to potential derailment.


While investors bask in the sun of all-time highs, a shadow of doubt lurks. The market's exuberance needs the validation of its old-school companion, or the joyride might hit a bumpy patch sooner than expected. Keep your eyes peeled on the transportation sector – it might just hold the key to whether the market's ascent continues or stumbles.


In short, celebrate the present, but acknowledge the whispers of caution. Keep a watchful eye on transportation signals, this market rally might not be as straightforward as it seems.



Market Shifts and Whispers: A Week in Review


Stocks Find Footing After Bumpy Start: Following last week's jitters, markets staged a comeback. The S&P 500 climbed 1.8%, the Nasdaq roared back with a 3.2% rally, and even the Dow clawed its way up 0.3%. Utilities bucked the trend, dipping 1.9%, while banks and brokers remained subdued. Small-caps continued their struggle, with the Russell 2000 flatlining, and the Transports barely budged.


Yields Surprise with Dovish Tune: In a surprising twist, the bond market serenaded investors with falling rates. Two-year yields plummeted 24 basis points, dragging their longer-term brethren down with them. This dovish melody contrasted starkly with December's hawkish crescendo.


De-risking Drumbeat or Speculative Samba? The big question on everyone's mind: was this a genuine shift towards de-risking, or just another dip in the speculation waltz? My money's on the latter. After a year of parabolic gains fueled by leveraged moonshots, the "magnificent seven" tech giants and their derivatives entourage might be shifting their tune. But don't count them out just yet; they'll keep squeezing shorts and chasing FOMO until the music stops.


Global Pulse Beats in Harmony: The market's heartbeat resonated around the world. The initial tremors of risk aversion from last week subsided, replaced by a newfound optimism. Global equities swayed in sync, and bond yields dipped in unison.


Data Drums a Different Beat: While the market reveled in a dovish beat, the data DJ spun a different tune. Stronger-than-expected inflation, robust consumer credit, and falling jobless claims painted a picture of a resilient economy. So, why the rate-cut whispers?


Fragile Foundations and Whispered Worries: The market's eagerness to price in rate cuts hints at underlying anxieties. A market reversal, unraveling of speculative bets, or a surge in hedging could trigger a liquidity crisis and send investors fleeing. Perhaps they're betting on a geopolitical shockwave forcing the Fed's hand, or maybe they're just spooked by the shadows lurking in China's financial and political landscape.


Remember, and keep a clear head as you navigate the market's ever-changing rhythms.



Random Musings and the Time Machine


Random Musings


If the stock market is a reflection of human psychology, then what does the Dow Theory say about our collective mind? Are we split between optimism and pessimism, or are we just confused and irrational?


Bitcoin is often compared to gold, but there is one big difference: gold has a physical presence, while bitcoin is purely digital. Does that make bitcoin more or less valuable, or does it even matter?


What if we could trade stocks in real time, like we do with instant messaging or social media? Would that make us more informed and efficient, or more impulsive and reckless?


Imagine a world where every company had to report its environmental, social, and governance (ESG) impact, along with its financial performance. Would that make the world a better place, or would it create new problems and challenges?


How do you define success as a trader? Is it about making money, beating the market, or achieving your personal goals? Or is it something else entirely?



On this day in history, January 16, 2024:


On this day in 1920, the 18th Amendment to the U.S. Constitution, which prohibited the manufacture, sale, or transportation of intoxicating liquors, went into effect. The era of Prohibition lasted until 1933, when the 21st Amendment repealed it. Prohibition had a mixed impact on the economy, society, and culture, as it gave rise to organized crime, speakeasies, bootlegging, and smuggling.


On this day in 1942, the first commercial jet airliner, the de Havilland Comet, made its maiden flight in England. The Comet revolutionized air travel, as it was faster, quieter, and more comfortable than propeller planes. However, the Comet also suffered from fatal design flaws, which led to several crashes and the loss of public confidence.


On this day in 1969, the Soviet Union launched the Soyuz 4 and Soyuz 5 spacecraft, which performed the first-ever docking of two manned spacecraft in orbit, and the first-ever transfer of crew from one space vehicle to another. The mission was a remarkable feat of engineering and coordination, and a milestone in the space race.


On this day in 1979, the Shah of Iran, Mohammad Reza Pahlavi, fled the country amid a popular uprising that led to the Iranian Revolution. The revolution ended the monarchy and established an Islamic republic, led by Ayatollah Khomeini. The revolution also had profound implications for the region and the world, as it triggered a hostage crisis, a war with Iraq, and a confrontation with the West.


On this day in 2001, Wikipedia, the free online encyclopedia that anyone can edit, was launched by Jimmy Wales and Larry Sanger. Wikipedia has grown to become one of the most popular and influential websites in the world, with over 50 million articles in over 300 languages. Wikipedia has also faced criticism and controversy, over issues such as accuracy, reliability, bias, and vandalism.


Final Ledger: A Market Mystery Unfolds


This week, the market served up a lot of contradictions, leaving investors perplexed but piqued. Data showed strength, flexing economic muscle, while sentiment remained a skittish cat, wary of the bullish sunbeams. The 'ol Dow Theory made experts scratching their heads, with its transportation partner refusing to join the record-breaking show. 


So, what's the verdict, dear investors? As the enigmatic Japanese proverb goes, "The best time to plant a tree was 20 years ago. The second best time is now." Last week, the seeds of uncertainty were planted, but so were the seeds of potential opportunity.


Keep in mind, the sun's rays can be as scorching as they are life-giving. 



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