What a difference a day makes. Yesterday, all eleven sectors were higher on the day, led by Consumer Discretionary (XLY).

But the market is stretched near-term, high Relative Strength Index (RSI) reading and the S&P below 4,818.

The current euphoria centers around rate cuts happening as early as March (peaked at 83% chance yesterday), which was unthinkable a couple of months ago.

The market is also getting a boost from the weakening U.S. Dollar (DXY), now below key moving averages and nearing 100, which is extraordinarily pivotal.

Breakouts

This is a great illustration of why breakouts can be so exciting. Lots of charts look like this and will determine if this rally turns into something that will really anger the bears.

Today is the official day the Santa Claus Rally would begin. I still say it started on October 27^th.

Today’s Session

 A lot of data came out this morning, but this is probably the chart of the day.  PCE less food and energy over the past six months has come down to 1.8% (three-month average down to 2.16%). This solidifies a March rate cut and has the Fed twirling the champagne they’ve had on ice for the last few weeks. It’s almost time to pop those bottles.

Personal Income & Spending

Personal income climbed 0.4%, in-line with consensus, but spending was 0.2% against the consensus of 0.3%.

It’s the second month in a row where the pace of spending was below income, which moved the savings rate back to 4.0%.  Savings at the pump were more than offset by spending on basic housing needs, utilities and eating out. 

While many are cheering the economic data, the slower consumer spending seen in the government data is also echoed by another major company this week.

Nike (NKE) posted mixed results, but it was the guidance that sent shares lower.

North America -4%, is the only geographical region to see a decline in sales.

There will be no afternoon note.  Wishing you and yours and wonderful holiday season.

Merry Christmas

Comments

MERRY CHRISTMAS to you as well Charles. And Thank you for your insights in 2023 Don Fapore on 12/22/2023 10:28:07 AM

I hope the fed doesn't cut rates until much later in the year. Don't want inflation to pick up again. IE: stagflation. However it is an election year and the administration will push Powell to lower them. Michael D Thomas on 12/22/2023 12:19:25 PM

Merry Christmas to you all! Thank you for the wonderful data y’all provide! John DiMassa on 12/23/2023 10:26:25 AM

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