The Bottom Line
Encouraging U.S. economic news released on Friday added to the possibility of the proverbial Santa Claus yearend rally that normally lasts to the first two trading days in January. The November Core PCE Price Index on a year-over-year basis came in at 3.2%, nicely lower than consensus at 3.4%. Equity and bond investors interpreted the news as U.S. inflation pressures are coming down sooner than expected: The FOMC could lower the Fed Fund Rate sooner than the second half of 2024, setting the stage for a sooner rise in GDP growth.
Economic News This Week
December Chicago Purchasing Managers Index released at 9:45 AM EST on Friday is expected to drop to 51.0 from 55.8 in November.
Selected Earnings News This Week
Nil
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for Dec.22nd 2023
Green: Increase from previous day
Red: Decrease from previous day
Source for all positive seasonality ratings: www.EquityClock.com
sonal/Technical Commodities Trends for Dec.22nd 2023
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for Dec.22nd 2023
Green: Increase from previous day
Red: Decrease from previous day
Technical Scores
Calculated as follows:
Intermediate Uptrend based on at least 20 trading days: Score 2
(Higher highs and higher lows)
Intermediate Neutral trend: Score 0
(Not up or down)
Intermediate Downtrend: Score -2
(Lower highs and lower lows)
Outperformance relative to the S&P 500 Index: Score: 2
Neutral Performance relative to the S&P 500 Index: 0
Underperformance relative to the S&P 500 Index: Score –2
Above 20 day moving average: Score 1
At 20 day moving average: Score: 0
Below 20 day moving average: –1
Up trending momentum indicators (Daily Stochastics, RSI and MACD): 1
Mixed momentum indicators: 0
Down trending momentum indicators: –1
Technical scores range from -6 to +6. Technical buy signals based on the above guidelines start when a security advances to at least 0.0, but preferably 2.0 or higher. Technical sell/short signals start when a security descends to 0, but preferably -2.0 or lower.
Long positions require maintaining a technical score of -2.0 or higher. Conversely, a short position requires maintaining a technical score of +2.0 or lower
Changes Last Week
Technical Notes for Friday
TSX Composite Index moved above 20,843.21 and S&P/TSE 60 Index moved above 1,255.49 extending intermediate uptrends.
U.S. Junior Gold equity ETF $GDXJ moved above $39.18 and $39.41 extending an intermediate uptrend.
Gold equity ETF $GDX moved above $32.39 extending an intermediate uptrend.
ANSYS $ANSS a NASDAQ 100 stock moved above $351.23 extending an intermediate uptrend. Synopsys is in negotiations to acquire the company
Dow $DOW an S&P 100 stock moved above$55.02 and $55.45 extending an intermediate uptrend.
Canadian Association for Technical Analysis Presentation
Next Zoom presentation is offered tomorrow at 8:00 PM EST. Presenter is Jeff Parent from Castlemoore. Everyone is welcome. Not a member of CATA? Following is the link:
Contact www.canadianata.ca
Links offered by valued providers
Top Five Charts of 2023 #4: Leadership Themes | The Final Bar (12.21.23)
Top Five Charts of 2023 #4: Leadership Themes | The Final Bar (12.21.23) – YouTube
Top Five Charts of 2023 #5: Bitcoin | The Final Bar (12.22.23)
https://www.youtube.com/watch?v=SbPFGW42KRw
Stocks vs. Bonds: The Clear Preference | Sector Spotlight (12.22.23)
https://www.youtube.com/watch?v=T00ih058B6s
Bob Hoye Dec 22, 2023: Gold Juniors Should Expect a Better New Year
Opportunities Building in Gold Sector – HoweStreet
Ross Clark, Victor Adair, Mark Leibovit comments
This Week in Money – HoweStreet
Outlook for North American equity market for 2024
Don Vialoux was a guest on Michael Campbell’s Money Talks on Saturday. Following is a link to the radio broadcast: December 23rd Episode (mikesmoneytalks.ca)
Following are notes prepared before the interview:
Comment: North American equity indices follow a four year Presidential cycle.
Seasonal expectation: North American equity indices are about to enter their fourth year of the U.S. Presidential cycle. Historically, North American equity indices record their strongest year in the third year of the four year Presidential cycle. The second strongest year is the fourth year of the Presidential cycle. Average return per period for the Dow Jones Industrial Average since 1930 in the fourth year of the Presidential cycle is 8.0 %.
Actual observations: In 2023 North American equity indices closely followed the Presidential four year cycle. In 2023 to date, the S&P 500 Index has gained 24.2%, the Dow Jones Industrial Average has advanced 13.3% and the TSX Composite Index has increased 7.6%
Outlook: During the fourth year of the Presidential cycle, North American equity indices have a history of moving slightly lower from January to mid-March when the U.S. Presidential primary season reaches its peak. Thereafter, North American equity indices consistently have moved higher to the end of the year.
Actual observations: Near the end of December 2023, North American equity markets are extremely overbought: Over 90% on S&P 500 stocks and over 75% on TSX stocks were trading above their 50 day moving average. After the proverbial Christmas rally this year, a modest correction by broadly based North American equity indices into mid-March 2024 is likely followed by a consistent upside move to the end of 2024. If the average 8% gain during fourth year of the Presidential cycle is realized by the end of 2024, the S&P 500 Index has upside potential to 5150 and the TSX Composite Index has upside potential to 22,500.
What about a Christmas rally this year? History shows that the S&P 500 Index records its strongest periodof the year from December 21st to December 31st: the so called “Santa Claus rally”. Since 1950, average annualized return for the period by the S&P 500 Index has been 40%. That compares to an average annual return by the Index of 9.0%. Recent bullish projections for North American equity indices for 2024 offered by major Canadian and U.S. investment dealers during the past week likely will encourage higher equity index prices until the end of the year.
Which sector has the best chance of outperforming broadly based equity indices in 2024? The year 2024 is expected to be a “golden” year. Top sector choice is gold and gold equities. Gold bullion prices in Canadian Dollars recently broke to an all-time high above $2,823 per ounce and briefly moved above a previous all-time high in U.S. dollars at $2,090 set in July 2020. Seasonal influences for gold and gold equities turn positive in mid-December for a seasonal trade lasting until the first week in April. Gold prices could be helped in 2024 by extended purchases of bullion by Russia, China and India. Also, increasing international uncertainties related to Middle East and Ukraine events could trigger additional buying. On the charts, the price of gold equities/ ETFs have outperformed the price of bullion since early November, a technical sign that both will continue moving higher. Next intermediate technical target for gold is $2,400 U.S. per ounce.
Investors can purchase gold and gold equities in a variety of ways: The purchase of Gold jewelry for Christmas is a nice Christmas present. The paper purchase of gold bullion is possible through Canadian and U.S. stock exchanges. The most actively traded gold bullion Exchange Traded Note in the U.S. is Gold Share SPDRs (Symbol: GLD). Most actively traded U.S. gold equity Exchange Traded Funds are the Gold Miners ETF (Symbol: GDX) and the Junior Gold Miners ETF (Symbol: GDXJ). In Canada, the most actively traded gold equities ETF is Global Gold Index ETF (Symbol: XGD.TO).
S&P 500 Momentum Barometers
The intermediate term Barometer added 0.80 on Friday and added 2.40 last week to 90.00. It remains Overbought.
The long term Barometer added 0.60 on Friday and 1.40 last week to 76.40. It remains Overbought.
TSX Momentum Barometers
The intermediate term Barometer added 2.22 on Friday and 4.63 last week to 74.67. It remains Overbought.
The long term Barometer added 1.33 on Friday and 9.36 last week to 61.78. It changed from Neutral to Overbought on a move above 60.00. Daily trend remains up.
Disclaimer: Seasonality ratings and technical ratings offered in this report and at
www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed
|
|
Equity Clock Publications