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CPI, Earnings Headline This Week's Events

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Our View

The emphasis at the end of last year and the beginning of the new year is a three-letter word — The “Fed: — and expectations for lowering rate 6 times in 2024. 

The S&P closed out the last few trading sessions of 2023 on the weak side, which carried through on the downside last week with a 1.6% loss in the first 4 sessions of the year after the Fed said they didn't have a timetable for when they will start lowering interest rates. 

Had it not been for the late-day Friday buy program, the ES would have been down 4 of the first 4 sessions of the year — not exactly what the bulls had in mind. Bonds fell and inflation again became the focus as the large institutional accounts sold billions in tech holdings in 6 out of the last seven sessions. 

While the PitBull did mention that he had seen the first session of the year down, I also remember times when the ES closed out the year on the highs after a big rally and then fell apart. Are we in for more downside? When you look at the ES being down almost 20% and closing up 24%, the 1.6% decline in the S&P is minuscule as is the Nasdaq's 3.5% fall. 

So far everything has been orderly. Volumes have remained on the low side and the ranges have started to expand. At the ES 4702 low, the ES has sold off 140 points from its December contract high. Again, I think it's sufficient for a small pullback, but there has been zero panic. 

There is an abundance of new long and sidelined cash getting ready to be put to work on stocks. I always like reminding people there is a full year in front of us and there is no need to force trades. This means there are going to be a lot of big rips and dips in 2024. 

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