Stocks Try for 9th Straight Weekly Gain

Volumes should remain light

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Our View

Home sales ticked up from 13-year lows in November after five consecutive months of declines. Core prices, which exclude volatile food and energy costs, rose just 1.9% on a six-month annualized basis. Mortgage Bankers Association predicted mortgage rates could fall to 6.1% by the end of 2024, and 5.5% by the end of 2025. 

Bitcoin is up more than 160% this year and the S&P 500 is almost up 25% in 2023. While not out of the woods yet, the Fed seems to have done a good job.

But do you think the coast is clear? 

While I am happy about the prospects, I don't think this is a one-and-done deal. The dollar index fell on Tuesday and the euro hit a four-month high and is on track to post its worst performance since 2020. We still have all the geopolitical problems too — China, Russia, North Korea, Iran, the Red Sea situation, and Gaza. 

Bottom Line: What I can say is we are closing out the year with some solid economic footing and stock market returns and I expect more of the same at the beginning of the new year.

Our Lean — Danny’s Trade

This is Danny Riley’s personal trading plan for the day.

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MiM and Daily Recap

ES Recap

The ES rallied up to 4815.00 on Globex 4808.75. After the open, the ES traded 4808.00 and rallied up to 4819.50 at 10:27 and then made 6 new highs up to 4834.50 at 3:28 as the early NYSE imbalances showed $534 million to sell. 

After the high, the ES pulled back to the 4827.50 level at 3:46 and traded 4829.50 as the final 3:50 cash imbalance showed $2.9 billion to sell. From there, the ES traded down to 4822.00 and traded 4826.50 on the 4:00 cash close. After 4:00, the ES traded in a small range and settled at 4827.00, up 21.75 points or +0.45% on the day. It’s up 24.36% YTD and touched its highest intraday level since Jan. 2022, while the Nasdaq is up 44%, its best year since 2003.

In the end, the holiday markets were all about thin to win. In terms of the ES's overall tone, it was firm all day. In terms of the ES's overall trade volume was low: 108k traded on Globex and 519k on the day session for a total of 627k, the lowest holiday volume as far back as I can remember.

Technical Edge

  • NYSE Breadth: 78% Upside Volume

  • Nasdaq Breadth: 86% Upside Volume (!)

  • Advance/Decline: 74% Advance

  • VIX: ~13 

S&P 500 — ES Futures

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Guest Post

Enjoy this excerpt from my friend Jeff Hirsch at Stock Trader’s Almanac. 

On the last trading day of the year, the NASDAQ has been down in 17 of the last 23 years. And it’s the weakest performing day, on average, of the Santa Claus Rally as noted on page 118 of the Stock Trader’s Almanac 2024.

Last-minute tax-loss selling, old sayings such as “year ends make great exits,” a desire to start with a clean slate, who knows exactly the answer, but the last trading day of the year has turned bearish over the last twenty-three years.

Since 2000, NASDAQ and Russell 2000 have the worst records. On the last trading day of the year, NASDAQ has been down in 17 of the last 23 years after having been up twenty-nine years in a row from 1971 to 1999.

DJIA and S&P 500 also exhibit a bearish bias over the last 36 years. Russell 2000’s record very closely resembles NASDAQ, gains every year from 1979 to 1999 and only six advances since.

Economic Calendar

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!

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