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December 23, 2024

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The Fed Is The New Waffle House

I had no idea the Fed could be such expert wafflers. But, as each month passes, it’s becoming clearer. The overall stock market trend, despite all the back-and-forth, yo-yo Fed decisions over the past 6 months, remains to the upside. Need proof? Check out this weekly S&P 500 chart for the past year:

Now, if you weren’t aware of any news, would you think any differently about this pullback to the 20-week EMA than prior tests to the same level? There was a volume spike, but keep in mind it was December monthly options expiration week. Quad-witching months (March, June, September, and December) typically are accompanied by heavier volume. The Friday market recovery occurred before any significant breakdown on this chart, which I find bullish. I view the stock market action from December 21st through December 31st to be the period where we normally see a “Santa Claus rally” – more on that below.

The Fed has made it clear in the past that they’ve been “data-dependent.” In the latest FOMC policy decision and subsequent press conference, however, Fed Chief Powell indicated that they’ve cut the number of anticipated rate cuts in 2025 from 4 to 2, because committee members feel that core inflation could be higher than they previously thought back in September, when the first rate cut was announced.

Here’s a problem I have, though. On Thursday, November 14th, the Associated Press reported the following:

The Fed acknowledged in this article that inflation remained persistent and above the Fed’s target 2% level. That day, Powell suggested that inflation may remain stuck somewhat above the Fed’s target level in coming months. But he reiterated that inflation should eventually decline. Given those November 14th remarks, if the Fed was concerned about inflation remaining elevated, then why not change their tune on 2025 interest rate cuts at the November 6-7 Fed meeting. If they’re truly “data dependent”, then what data changed from November 14th until the next Fed meeting on December 17-18 to prompt 2025 interest rate policy change?

Can I have a waffle, please?

Odds of a Santa Claus Rally

Again, I consider the Santa Claus rally to be from December 21st through December 31st, so let’s look at how many times this period has actually moved higher:

  • S&P 500: 58 of the last 74 years since 1950 (annualized return: +40.50%)
  • NASDAQ: 43 of the last 53 years since 1971 (annualized return: +61.80%)
  • Russell 2000: 31 of the last 37 years since 1987 (annualized return: +64.57%)

Based upon history, the odds of a Santa Claus rally is 78.4%, 81.1%, and 83.8% on the S&P 500, NASDAQ, and Russell 2000, respectively. And you can see the annualized return for this period in the parenthesis above. I’d say there’s a ton of historical performance to suggest the odds that we’ll rally from here until year end are rather strong.

Nothing is ever a guarantee, however.

Max Pain

In my opinion, the media is promoting the idea that inflation is re-igniting and that the Fed is becoming more hawkish. I believe last week’s selling is due to EXACTLY what I talked about with our EarningsBeats.com members during our December Max Pain event on Tuesday. There was a TON of net in-the-money call premium and the big Wall Street firms aided their market-making units by telling us how bad the Fed’s actions and words are for the stock market. That Wednesday drop saved market makers an absolute FORTUNE. We pointed out to our members the downside market risk that existed, because of max pain. A day later, VOILA! It’s magic! The crazy afternoon selling was panicked selling at its finest, with the Volatility Index (VIX) soaring an astounding 74% in 2 hours! On Thursday and Friday, the VIX retreated back into the 18s (from 28) as if nothing ever happened.

There’s a reason why I preach every single month about options expiration and this was just another example of legalized thievery by the market makers. Let’s give them another golf clap.

MarketVision 2025

It’s almost time for my 2025 forecast, which will be a big part of our Saturday, January 4, 2025, 10:00am ET event. This year’s MV event, “The Year of Diverging Returns”, will feature myself and David Keller, President and Chief Strategist, Sierra Alpha Research. Many of you know Dave from StockCharts and also from his Market Misbehavior podcast. I’m looking forward to having Dave join me as we dissect what we believe is likely to transpire in 2025. For more information on the event and to register, CLICK HERE!

Happy holidays and I hope to see you there!

Tom

Stock Futures Lower after S&P 500 futures ticked down 0.18%

Stock futures are trading slightly lower Monday morning as investors gear up for the final month of 2024. S&P 500 futures slipped 0.18%, alongside declines in Dow Jones Industrial Average futures and Nasdaq 100 futures, which dropped 0.13% and 0.17%, respectively. The market’s focus is shifting to upcoming economic data, particularly reports on manufacturing and construction spending, ahead of this week’s key labor data releases.

November was a standout month for equities, with the S&P 500 futures rallying to reflect the index’s best monthly performance of the year. Both the S&P 500 and Dow Jones Industrial Average achieved all-time highs during Friday’s shortened trading session, with the Dow briefly surpassing 45,000. Small-cap stocks also saw robust gains, with the Russell 2000 index surging over 10% in November, buoyed by optimism around potential tax cuts.

As trading kicks off in December, investors are keeping a close eye on geopolitical developments in Europe, where France’s CAC 40 index dropped 0.77% amid political concerns, while Germany’s DAX and the U.K.’s FTSE 100 showed smaller declines.

S&P 500 futures will likely continue to act as a key barometer for market sentiment, particularly as traders assess the impact of upcoming economic data and global market developments.

S&P 500 Index Chart Analysis

This 15-minute chart of the S&P 500 Index shows a recent trend where the index attempted to break above the resistance level near 6,044.17 but retraced slightly to close at 6,032.39, reflecting a minor decline of 0.03% in the session. The candlestick pattern indicates some indecisiveness after a steady upward momentum seen earlier in the day.

On the RSI (Relative Strength Index) indicator, the value sits at 62.07, having declined from the overbought zone above 70 earlier. This suggests that the bullish momentum might be cooling off, and traders could anticipate a short-term consolidation or slight pullback. However, with RSI above 50, the overall trend remains positive, favoring buyers.

The index’s recent low of 5,944.36 marks a key support level, while the high at 6,044.17 could act as resistance. If the price sustains above the 6,020 level and RSI stabilizes without breaking below 50, the index could attempt another rally. Conversely, a drop below 6,020 could indicate a bearish shift.

In conclusion, the index displays potential for continued gains, but traders should watch RSI levels and price action near the support and resistance zones for confirmation.

The post Stock Futures Lower after S&P 500 futures ticked down 0.18% appeared first on FinanceBrokerage.

S&P 500 climbed 0.3%, and Nasdaq-100 futures jumped 0.7%

Stock futures climbed on Wednesday, driven by strong performances from Salesforce and Marvell Technology, following upbeat quarterly earnings. Futures tied to the Dow Jones Industrial Average rose by 215 points (0.5%), while S&P 500 futures gained 0.3%, and Nasdaq-100 futures advanced by 0.7%.

Salesforce surged 12% after reporting fiscal third-quarter revenue that exceeded expectations, showcasing robust demand in the enterprise software sector. Meanwhile, chipmaker Marvell jumped 14% after surpassing earnings estimates and providing optimistic fourth-quarter guidance, indicating resilience in the semiconductor industry.

This movement follows a mixed session on Wall Street, where the S&P 500 and Nasdaq closed with small gains, while the Dow dipped slightly. The broader market has experienced a modest start to December, contrasting with November’s robust rally, but analysts anticipate a resurgence in momentum. LPL Financial’s George Smith pointed out that December historically sees strong market performance, particularly in the latter half of the month.

However, economic data introduced some caution. ADP’s report revealed that private payrolls grew by just 146,000 in November, missing estimates of 163,000. This signals potential softness in the labor market, with investors now awaiting Friday’s November jobs report for further clarity.

S&P 500 Index Chart Analysis

Based on the provided stock chart, which appears to be a 15-minute candlestick chart for the S&P 500 Index, here’s a brief analysis:

The chart shows a clear upward trend, with higher highs and higher lows indicating bullish momentum over the analyzed period. The index has steadily climbed from a low of approximately 5,855 to a recent high of 6,053.58, suggesting strong buying interest.

Key resistance is observed near 6,050-6,053 levels, as the price has struggled to break above this zone in the most recent sessions. If the index breaches this level with strong volume, it could lead to further upward movement. Conversely, failure to break out may lead to a pullback, with potential support around the 6,000 psychological level and 5,980, where consolidation occurred previously.

The candlestick patterns show relatively small wicks, indicating limited volatility, which could imply steady market confidence. However, the bullish rally could be overextended, warranting caution for traders, especially if any negative catalysts emerge.

In summary, the short-term trend is bullish, but traders should monitor resistance levels and volume for signs of a breakout or reversal. It’s also essential to watch broader market factors, as indices are often influenced by macroeconomic data and sentiment.

The post S&P 500 climbed 0.3%, and Nasdaq-100 futures jumped 0.7% appeared first on FinanceBrokerage.

Netflix secures U.S. rights to the FIFA Women’s World Cup in 2027, 2031

Netflix on Friday announced it has secured exclusive rights in the U.S. to the FIFA Women’s World Cup in 2027 and 2031.

The announcement comes just days before Netflix will stream its first ever National League Football Christmas Day games. Adding the Women’s World Cup to its portfolio shows the streaming giant is continuing to bulk up its sports rights portfolio. It also comes as the popularity of women’s sports has risen in the last year.

“I’ve seen the fandom for the FIFA Women’s World Cup grow tremendously — from the electric atmosphere in France in 2019, and most recently, the incredible energy across Australia and New Zealand in 2023,” Netflix Chief Content Officer Bela Bajaria said in a press release. “Bringing this iconic tournament to Netflix is not just about streaming matches — it’s about celebrating the players, the culture, and the passion driving the global rise of women’s sports.”

The 2027 tournament is set to take place in 12 cities across Brazil. The host country for the 2031 tournament is yet to be announced.

Netflix said that coverage of the Women’s World Cup will include commentary and entertainment from studio shows and top-tier talent, as well as Netflix-original documentaries around major players and the sport’s rapidly growing fanbase in the lead up to the tournament.

The Women’s World Cup has continued to grow in popularity, and more people in the U.S. tuned in for the women’s final in 2019 than the men’s in 2018. U.S. viewership dropped substantially in 2023, however, after the two-time defending champions were knocked out in the Round of 16.

As the audience for the WNBA and women’s national soccer team has grown significantly in the U.S., soccer remains one of the most popular sports globally.

Netflix has 282.7 million global memberships, and the streamer has been pushing for growth internationally in part through its cheaper, ad-supported tier.

Sports media rights have also exploded in valuation for media companies as live sports beckon the biggest audiences.

Netflix has continued to grow into the sports category, streaming a Mike Tyson-Jake Paul fight last month, which was watched by 108 million people, making it the most-streamed sporting event ever, according to Netflix.

On Christmas Day, the streamer is set to cover the NFL double-header featuring the Kansas City Chiefs vs. the Pittsburgh Steelers and the Baltimore Ravens vs. the Houston Texans.

This post appeared first on NBC NEWS