The Fuse
Equity futures are mixed and not moving much early this morning as the market drags through the remainder of 2023. Only three trading days left in the year.
Interest Rates are sharply lower as bonds are rocking today. The long end of the curve is getting quite a bid so far. We should see this encourage traders to pile into risk assets like small caps and Nasdaq names today.
Gold is charging higher and is moving towards the 2,100 per ounce level. At this point the metal will be at its highest point ever on an annual close. The fed futures market continues to push for lower rates early and often in 2024. European stocks look to finish the year with double digit gains, Japan finished higher by more than 1% overnight while mainland China stocks rebounded from earlier losses. Oil was higher but is now trading below $75 per barrel in crude futures. Bitcoin is on the rise as this crypto currency remains well bid.
Earnings are slow this week as nothing notable is on tap. The big earnings reports start after the first of the year.
Solid move up following a three day weekend as buyers responded with a broad rally that included many sectors. Such widespread bullishness is positive for the uptrend to continue. The internals were very strong (see below), and that often means good followthrough the next few days. Russell 2K led the way once again with more than a 1% gain on volume.
Very solid breadth figures at the end of the day thanks to strength in the Russell 2K, which led all stocks higher. That is important for the market to continue rallying, gobs of breadth are a bullish characteristic. We are still in the Santa Claus Rally period and that could help drive sentiment towards buying, too.
Pretty decent volume on this day after the holiday, a bit surprising as this time of year there is less volume and more volatility. Yet, the bulls seem intent on finishing the year on a positive note, with three trading sessions left in 2023 that could be the case.
The SPX 500 is back towards that 4,800 level again and if that is penetrated this week a new all-time high will happen. We are looking for a tag of 4,818, the old high from just about two years ago. Momentum is strong as the Dow and Nasdaq print new record highs, too.
The Internals
What’s it mean?
Very solid internals yesterday, enough to convince us the bulls remain very interested in buying this market. That’s unusual, but as we have said the wall of worry is up, nothing better to keep a trend moving. VOLD was strong and bold all session while the VIX ran up and ended a bit lower on the day. Volatility sellers after a holiday is not common but is bullish when it occurs. Ticks were strong again, a slew of buy programs hit all day long, look at the green in those two panes.
The Dynamite
Economic Data:
- Wednesday: mortgage applications
- Thursday: Jobless claims, retain inventories, pending home sales
- Friday: N/A
Earnings this week:
- Wednesday: N/A
- Thursday: N/A
- Friday: N/A
Fed Watch:
Nothing much on the Fed front this week though the prior week had some more jarring words from fed speakers. The current market or fed funds futures seems to be predicting a slew of rate cuts in 2024, far more than the committee expects. Inflation trends are certainly slowing down though and that may push the Fed to consider more cuts, but the data will help them decide.
Stocks to Watch
Apple – This company continues to pull a rabbit from its hat and hit their sales goals, with holiday shopping still going on can they do it again?
Amazon – It’s go time or Amazon as they simply dominate online sales. The holiday season is often a boom time for them, we’ll hear all about it soon.
Tesla – Plenty of news here with this company as the stock continues to grind higher. That is a big tell, big money is still coming after the stock.