Hey it’s Kieran! I hope that you had a great weekend and are looking forward to getting back into the markets this week. I’ll hopefully speak to you in the Traderseed programs, and as ever, if you have any questions, just contact me let me know. With that said, let’s get started!
Weekly Watchlist
We are now entering the closing weeks of 2023 after Fed Chair Jerome Powell said the historic tightening of monetary policy is likely over and discussion of rate cuts is coming “into view”. This week we’ll get a final read on inflation in the US with Friday’s release of the personal consumption expenditures report, the Fed’s primary inflation gauge.
There will also be data on US consumer confidence, initial jobless claims and durable goods orders while updates on the housing sector include reports on both new and existing home sales.
The Macro View
S&P 500 Positioning still ‘Stretched’. Another big up week for equities last week, the 7th green weekly candle in a row for the S&P 500, marking a 15% rise in 7 weeks. Everyone seemingly waiting for the pull back (assuming it comes).
What’s supporting this rally? Inflows are still coming in thick and fast. Largest 8-week inflow to equities since March’22.
If everyone is already long, where are these new inflows coming from? A clue might come from the Treasury markets. With interest rates so high, investors have poured money into treasury funds. Now that rates are coming down, money is getting put to use elsewhere.
So money is moving out of Treasury funds and into Equities, how much longer can this last? Well, we could be just getting started. If this gap starts to close for real now and gains momentum in 2024, it is needless to say a very good support for equities.
What about sentiment? Surely we cannot keep rallying at these overbought levels? Well on BofA’s slow moving sentiment indicator, we are only just getting to a neutral level. Could be a lot more room still to run.
Which stocks are benefitting the most? As we have covered in depth for the last 6 months, almost all inflows are going to the biggest stocks in the world.
Still waiting for a pullback? Keep in mind, it might not come for a while. January is the month where we historically have seen the largest inflows into equities every year.
Guys, thank you for your support this year. If you’ve made it this far in my newsletter then I commend and appreciate you. I have some new things in the works that I am hoping to announce early next year. If everything pans out then Traderseed will be going to the next level, and i’ll be back making content on YouTube every week. No newsletter for the next 2 weeks as it’s Christmas and New Year, but I’m looking forward to getting back to work with a renewed focus in 2024. I wish you and your family a great holiday season and all the best for your trading in 2024.
I hope you found this interesting and useful. As ever, keep your risk management top of mind, trade safe, and stay nimble out there.
Have a good week!
Kieran
www.traderseed.io
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