Bullish Into Year End

We've been pretty bullish this year.

So SPY SPY overbought finally washed away today by finally going sideways for a couple of days. Action in that overbought was very strong. That implyies that the market very much wants to go higher probably into year end.

I say into year end because sometimes calendar flips are a tale of two cities. I do think January is not really a read on short term markets but rather a read for the year as a whole but we have some crosswinds setting up.

I think, for now, more good than bad.

The Fed was out today saying through NY Fed Pres Williams that they plan to keep rates restrictive for longer and they don't expect to see 2% inflation until 2025. That implies that market participants need to hold their horses and push out when they think the Fed likely cuts.

That's going to be a ping pong match in early 2024. Low inflation means markets want a cut. But, the Fed's worried about the 1970s so they will likely NOT be data dependent and likely wait too long, hurting markets.

But as long as jobless claims doesn't start jumping (showing a weaker economy) then I think the market holds. So, bad news stubborn-Fed-market-days in early 2024 net net hold and the market treks net net higher. That's even with a stubborn Fed.

If jobless claims jump and the Fed wants to be stubborn then I think the market has risk.

We will watch jobless claims. They held nicely today. GDP Now also is holding nicely. Good economy means to me good market.

So net net with this data (And I AM data dependent unlike the Fed), the market has more up than down into year end and likely more up than down in January and Q1, all things equal, which should mean a good 2024 for markets as well.

Then, I think, when the Fed finally realizes they are causing deflation by staying stubbornly too high for too long, they'll be deer in headlights and swing back with a record cutting episode.

Big swing Pandemic cuts too-much-this-way caused todays inflation. Stubborn delaying cuts too-long-that-way likely causes deflation. Then post-deflation-prints, big swing too-late deer-in-headlight cuts causes the markets to go nuts probably late 2024.

Let's see.

Wishing you all continued success.

Chaim

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All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. Opinions given are at this moment and can change rapidly after this is published. If our calls are made public (outside the service) we may or may not update our opinions publicly. .