Investors would be forgiven for wanting to sit out in the waning days of 2023, given recent volatility and the high hopes riding on that so-called Santa Rally.
That said, the setup is looking positive for Tuesday as trading gets underway in a shortened trading week. With the big inflation data now past us, all investors have ahead of them is a smattering of U.S. housing data and weekly jobless benefit claims in the next few days.
What has marked the last few weeks of trading are those high hopes riding on Federal Reserve interest-rate cuts next year, with a total of seven seen in 2024 though some warn that is a little too optimistic.
No matter how lopsided those expectations may be, “near-term market momentum is likely to persist as investors buy into the euphoria,” says our call of the day from The Kobeissi Letter’s Adam Kobeissi.
“The S&P 500’s clear disregard for overbought technical indicators and the straight-line higher type of price action reinforces this view,” he tells clients in a Dec. 25 newsletter.
“Also supporting equities into the New Year are sustained hopes that geopolitical tensions are contained and oil prices, as well as prices of other commodities, have come down significantly which should continue to support the Fed’s fight against inflation,” said Kobessi. Crude-oil prices, for one are down over 8% so far for 2023.
And the strategist said while they don’t think there’s an all clear on inflation yet, near-term momentum for stocks will “persist solely on the basis of investors anticipating the long-awaited Fed pivot.”
Looking at the technical picture, he notes the S&P 500 index briefly pushed above 4,770 on Dec. 20 before dropping nearly 80 points in just a few hours. On Friday, the index closed 0.8% from its most recent record close of 4,796.56 hit Jan. 3, 2022.
The same happened on Dec. 22, when the index crossed back above 4,770, he said, adding that since then, the daily RSI (relative strength index, a momentum indicator) has fallen from around 83 to around 71, “which still marks overbought conditions,” said Kobessi.
He also notes that the daily bottom Bollinger Band — also an overbought/oversold indicator — has flattened at 4,484, while the daily top Bollinger Band has shifted higher, having ended the week at 4,799. When a security’s price moves above the upper Bollinger Band it can be viewed as overbought, while moving below that indicates oversold.
A continued move higher in the top Bollinger Band is a “strong signal” that momentum is moving higher and the Dec. 20 low of 4,697 was a “brief near-term higher low,” he said.
“Looking ahead, we believe that the S&P 500 is poised for a move into new all-time high territory, breaking above the 4818 previous all time high,
setting up for a continued rally into early-January. Therefore, we are now bullish on the S&P 500 with a 4,820 target and 4,690 stop-loss and look for a move above 4,780 as soon as this week,” he said.
The markets
U.S. stock index futures
ES00,
YM00,
NQ00,
are creeping higher, with Treasury yields
BX:TMUBMUSD10Y
steady. Gold
GC00,
is also up, with oil prices
CL.1,
getting a modest lift.
| Key asset performance | Last | 5d | 1m | YTD | 1y |
| S&P 500 | 4,754.63 | 0.75% | 4.28% | 23.83% | 23.66% |
| Nasdaq Composite | 14,992.97 | 1.21% | 5.21% | 43.25% | 42.82% |
| 10 year Treasury | 3.881 | -5.13 | -44.36 | 0.14 | 3.41 |
| Gold | 2,074.90 | 1.65% | 3.00% | 13.38% | 14.89% |
| Oil | 73.88 | 1.36% | -1.52% | -8.24% | -6.89% |
| Data: MarketWatch. Treasury yields change expressed in basis points | |||||
The buzz
The S&P Case-Shiller 20-city home price index is due at 9 a.m. ET, in a largely quiet week for data, that includes weekly jobless claims and new home sales.
Manchester United
MANU,
shares are up 10% after British billionaire Jim Ratcliffe said he’ll buy a minority stake in the U.K. soccer club.
Shares of U.S.-listed Gracell Technologies
GRCL,
are up 58% after the Shanghai-based biopharmaceutical group said AstraZeneca
AZN,
AZN,
will buy it in a deal worth up to $1.2 billion.
Bristol Myers
BMY,
is buying radiopharmaceutical group RayzeBio
RYZB,
at a more than 100% premium in a $4.1 billion deal.
NIO stock
NIO,
is up over 3% after the Chinese electric-vehicle maker unveiled its executive four-seat sedan with a starting price of $112,780.
Tesla
TSLA,
disclosed a recall of 120,423 Model S and X vehicles, over door-safety issues.
U.S.-listed shares of China’s Hollysys Automation Technologies
HOLI,
are up 5% after a consortium led by Dazheng Group Acquisition offered $1.8 billion in cash to buy the automation control system solutions provider, topping a bid from private investment firm Ascendent Capital Partners.
China voiced support for the online gaming industry and said 105 new games were approved, after last week’s proposed curbs last week sparked heavy losses for NetEase
NTES,
Huya
HUYA,
and Tencent Holdings’
700,
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Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
| Ticker | Security name |
|
TSLA, |
Tesla |
|
NVDA, |
Nvidia |
|
NIO, |
Nio |
|
GME, |
GameStop |
|
MARA, |
Marathon Digital |
|
AAPL, |
Apple |
|
AMC, |
AMC Entertainment |
|
MULN, |
Mullen Automotive |
|
AMZN, |
Amazon.com |
|
MSFT, |
Microsoft |
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