Stock Market Update Monday December 18, 2023 The FOMC Votes For The Democrats. What caused Jerome Powell & Co to pivot so soon at last week's FOMC meeting, while they have not cut rates yet, obviously the verbiage has changed, and their recent language hasn't deviated significantly from the last meetings. The possibility of political motivations influencing their decisions in 2024, particularly with the approaching election, can't be ignored. This has led me to seriously consider the Fed's potential politicization for the first time. It's worth noting that the dovish leanings of Jerome Powell & Co. and the majority of the FOMC members are DOVES than HAWKS add another intriguing layer to this complex scenario.
If the market comes to believe the FOMC will be politically motivated in 2024, investors could front-run the potential recklessness by aggressively buying stocks and pushing prices higher. This could weaken the dollar and bonds in 2024, while conversely, stocks could rise and the economy would grow. To track this potential scenario and its impact, I plan to closely monitor this topic next year. This is why we rely on charts, all emotion is eliminated from trading. Our pattern recognition algorithms analyze market price, volume, momentum, and elapsed time to identify repeating patterns on all timescales. People usually get trends right but often make mistakes at the beginning and end phases.
The Nasdaq Composite index has risen for eight consecutive days, with bullish sentiment persisting. New highs on the major index are in sight, as the S&P 500 now sits just 1.2% south of its January 2022. Indices show an ongoing rise, and big tech stocks are leading, suggesting an uptrend. Seasonality is expected to be positive starting December 21, 2023 with the Santa Claus Rally lasting until the first week of January 2024.
Away from stocks: Treasurys had a mixed showing, the two-year yield ticked to 4.43% from 4.44%, and the long bond rose five basis points to 4.05%. WTI crude advanced toward $73 a barrel, and gold rebounded to $2,028 per ounce. the DXY remained flat, gold miners showed mixed performance with small changes, and the VIX closed lower below 13.
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