Dear New World Investor:
There’s now $8 trillion in money market funds and CDs. Most of that will stay in some form of fixed income, but some has been waiting for a market drop to buy stocks. Friday’s record S&P 500 close should get some of the sideline money throwing in the towel and buying stocks.
Historically, after an all-time high the S&P 500 has outperformed its long-term average one-, three-, six-, and 12-months later. The one-month returns are not quite as strong, suggesting a short-term overbought condition in some cases. One year later, the S&P 500 has risen 13 out of 14 times by a median of 13.4%.
Click for larger graphic h/t The Market Ear
It was a broadly-based upturn. The S&P 500 and Dow Jones Industrials set all-time highs Friday, and the Nasdaq Composite set a 52-week high, supporting the case for further gains.
The fractal dimension is still in the uptrend that’s taken us to this new all-time high, but probably not much further. Friday’s move pushed it below 40, and 30 usually marks the end of a trend.
The most likely pattern will be a couple of more weeks of upside during earnings report season, followed by a mixture of time consolidation – churning prices – and short, sharp price drop consolidations that take a while to recover – more churning.
As I said in last Thursday’s report, my economic outlook for 2024 is pretty different from Wall Street’s. The big difference is I think they are wrong to expect early Fed cuts, and if I’m right that will cause them to turn more negative on stocks. Put it all together and I think we should expect the usual fourth year of a Presidential term with high-level churning that frustrates both bulls and bears.
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What does Flash Alert ‘ATH’ even mean? Does it refer to a stock with the Symbol ATH?
Sorry, All Time High
What is the flash alert and where is it?
You commented on it.
It is “all time high.” In scientific writing, we would say, “all time high (ATH).” Later, ATH can be used alone in other sentences.
Why is this a flash alert when there is nothing to be done? Should we buy, sell, buy puts or do nothing? Seems a little click baity to me.
Didn’t know password-protected posts could be “click baity.”
What are we supposed to do with this flash alert then maestro?
I think it nets to a mediocre, churning range for the broad market. Not a good year to buy options, but a good year to write them. Wall Street has to give up on the early rate cuts theory, which might pressure stocks in the near term. A mild recession probably won’t hurt most companies, especially tech, so that should get stocks to more all-time highs in the second half of the year.
All time high…better than ATL…
New World Investor for 1.25.24 is posted.