(THE STARS ARE ALIGNING FOR THE S&P500 AS WE STRIDE THROUGH DECEMBER AND INTO 2024)
December 4, 2023
Hello everyone,
The stock market had an extraordinary November. The S&P500 was up 8.9%, its best month since July 2022, and the fourth-best November since 1950.
The set-up for December and into early 2024 is very strong and great for investors.
We’re going into a usually strong seasonal period, with December mostly the third-best month of the year, averaging gains of 1.4%, according to the Stock Trader’s Almanac. The difference with this December is that it is a pre-election year, and December pre-election years are stronger than the other Decembers: up 2.9% on average, up 75% of the time since 1950.
So, start writing that buy list.
Historically, the first part of December is usually the weakest due to tax loss selling. The second half, however, is where most of the gains usually occur, particularly after the quarterly expiration of individual stock options, options indexes, and index futures, which happens on December 15 this year.
Quite apart from seasonals, the macro backdrop is strong too.
10-year Treasury yields have dropped from 4.9% at the start of November to 4.3%.
Inflation is continuing to moderate: October core PCE was in line with expectations at 0.2% month over month and up 3.5% year over year. A little over a year ago, in September 2022, it was 5.5%.
Solid GDP growth: third quarter GDP was raised to 5.2%. The Atlanta Fed’s GDPNow Tracker is predicting a respectable 2.1% growth in the final quarter of the year.
Moderating inflation: Solid GDP growth. Unemployment is still low.
Wall Street is bullish. Most strategists are expecting higher stock prices in 2024.
Market Update
S&P 500
According to Elliott Wave analysis, the market is still rallying to a climatic 5th Wave. However, with bullish sentiment returning to the markets, the market seems “right” for approaching another peak soon. So, we could see around 4,700 before exhaustion and a medium-term pullback.
Gold
Gold has now completed its bullish five-month Inverse Head and Shoulders continuation pattern and will probably rally to $2,210 and $2,250. Support lies at $2000 (max).
Bitcoin
The uptrend is in progress, with a target around $43,000 where we see resistance and probably a medium-term pullback.
Musk and the Cyber Truck.
We finally had the launch of the Cyber truck last week in Austin, Texas, with Musk raving about its qualities, including its towing abilities, and its race-car-like acceleration. He even showed off its bulletproof doors.
Covid’s supply chain shortages and manufacturing problems delayed production by a few years.
Once the current volatility is digested, we should see higher moves in Tesla into 2024.
Love or hate Musk, his behavior can create volatility in the stock and that can potentially be profitable. We could see a move up in Tesla in the first part of the year to around $300.
Scaling in here could be a good move.
Cheers,
Jacquie
