Special Bulletin: December 13, 2023 (2p Update)

 And the Banks and Semis Shall Lead Them

The late, great, technical analyst Ralph Bloch often quoted that statement when analyzing the start of bull markets/moves. He had observed an eventual good economy was often preceded by strong initial moves in the bank stocks (and financials, generally- based on an improved interest rate outlook) and a return of an institutional risk appetite, which was often reflected in strong, early moves of leadership in the semi conductor and chip stocks. In honor of Mr. Bloch, and as a salute to this rising market, “…and the banks and semis shall lead them.”

Back in late November we stated and asked, “The follow-through day on the Nasdaq on the 1st followed by the S&P 500’s on the 2nd, along with our Current Market Outlook upgrade that same day, have ushered in a meaningful period of accumulation in stocks. The question on most investors/traders minds now is: “Where do we go from here?” Clearly the answer has been up.

In that same post we stated, “The bigger, real issue is the Fed and the direction of interest rates. Wall Street thinks they have figured the Fed out and they believe that the Fed is done raising rates. Even more, they believe that the Fed will have to start cutting rates early next year to avoid a recession. Those two idea’s are largely responsible for the November scramble back into stocks. This one point will have a huge impact on “where we go from here.” With the Fed releasing its apparently confirming outlook, the stock market is boldly extended its multi-week rally now.

The widely expected “low, rally, retest” sequence has not happened yet. Historically, it doesn’t have to happen. It is still possible, but what is more likely is a profit taking pullback to test the 21-day mav, but at higher levels. Note: The longer it takes for a retest, the stronger the new rally may become.

Our Current Market Outlook is “Market in an Uptrend” with a green light. Our “Core Four” (see top of page) has 3 green and 1 red light with a low VIX. We upgraded the signal to green at 2pm (SPX 4,668.24) based on the swift reaction to the Fed announcement.

The market is savagely overbought. Investor sentiment readings are very bullish. The VIX is at nearly 4 year lows- complacency alert! Having said all that, the trend is up until it is broken. Stay tuned tomorrow to see if the market does the “opposite of the Fed day” reaction.

“In the same region there were some shepherds staying out in the fields and keeping watch over their flock by night. And an angel of the Lord suddenly stood before them, and the glory of the Lord shone around them; and they were terribly frightened. But the angel said to them, “Do not be afraid; for behold, I bring you good news of great joy which will be for all the people; for today in the city of David there has been born for you a Savior, who is Christ the Lord. This will be a sign for you: you will find a baby wrapped in cloths and lying in a manger.” And suddenly there appeared with the angel a multitude of the heavenly host praising God and saying,

“Glory to God in the highest,
And on earth peace among men with whom He is pleased.”

When the angels had gone away from them into heaven, the shepherds began saying to one another, “Let us go straight to Bethlehem then, and see this thing that has happened which the Lord has made known to us.” So they came in a hurry and found their way to Mary and Joseph, and the baby as He lay in the manger. When they had seen this, they made known the statement which had been told them about this Child. And all who heard it wondered at the things which were told them by the shepherds.” Luke 2:8-18  NASB 1995  Merry CHRISTmas!

Game plan: The general stock market is extended and a breather may be due. However, certain areas of the market may play “catch up” even if the major indexes flatten out or retreat. Continue deploying capital in the strongest ideas of your watch list. Take partial profits were appropriate. Don’t forget that the Treasury Dept. will be selling BILLONS in new debt for many months. Please pray for the peace of Jerusalem.

Note: You can learn more about The Triumphant Core Four risk management system by clicking here.

Have a Triumphant day! ®