Futures are up modestly, capping off a strong year for the S&P 500, up 23.9% through yesterday’s close (versus +24.2% in 2023.) But, it was a year of haves and have-nots. Companies like PLTR (+349.5%) and NVDA (+177.6%) soared, while stocks in real estate, energy and healthcare suffered through another depressing year.

All together, the Magnificent Seven (GOOGL, AMZN, AAPL, META, MSFT, NVDA and TSLA – which collectively account for one-third of the S&P 500’s capitalization) climbed 48%, while the rest of the S&P 500 lagged at only 15%. In other words, investors who practiced reasonable diversification were heavily penalized.

continued for members… (more…)

Futures are off sharply on this, the next to the last day of the year.

continued for members… (more…)

Amidst all the hoopla over another positive year, it would be wise to consider that COMP has reached potentially important overhead resistance.

continued for members… (more…)

In our Sep 24 update [see: Oil Prices Pressure Bonds] we noted the effect of rapidly rising oil and gas prices on the inflation outlook which, in turn, resulted in a sharp rise in the 10Y – from 3.61% to the current 4.62%.But, the bigger threat to equity prices appears in our yield curve model, which reflects the potential for significant downside if the bond market continues on its current path.

continued for members… (more…)

VIX has been falling steadily over the past two years – so steadily, in fact, that it has established a very well-formed falling channel that is nicely correlated with SPX’s unrelenting rally.

The VIX futures (VX) chart above shows the sixth major spike running into overhead resistance from both the channel top as well as a trend line from the July lows. Quite simply, if VX can push back above the channel top then equities are in for more trouble. Should VX’s retreat continue, stocks’ meltup isn’t over just yet.

We’ll dig into some of the chart’s nuances after reviewing the rest of today’s charts. Futures are off slightly after a very strong bounce which, again, failed to clear the 50-day moving average.continued for members… (more…)

November PCE came in slightly better than estimates at 0.1% versus 0.2% MoM and 2.4% versus 2.5% expected but higher than October’s 2.3%.

All told, the print took a little pressure off futures, which are still down about 0.5% as we approach the open. Note that ES has nearly reached our 5852 target.

continued for members… (more…)

Stocks fell off a cliff yesterday after Jay Powell delivered an arguably hawkish rate cut. The market reacted particularly strongly to the revised outlook for 2025 wherein the number of rate cuts was reduced from four to two.

ES tumbled through our initial downside target at the 50-day moving average and is only just now hovering right below it.

The market finally accepted what we’ve been saying for months: inflation is not fixed, and in fact is on its way higher.

Wishful thinking has kept the market on the rise for over a year. It was further buoyed by post-election euphoria. All of that was unraveled by a 10Y which very conspicuously broke out of a falling channel.

continued for members… (more…)

While November retail sales gain of 0.7% beat expectations of 0.6%, sales excluding auto and gas came in well below consensus: 0.2% versus 0.4%. Markets are pricing in a 97% chance of a 25 bps rate cut tomorrow, but skeptics (like us) make a great argument that loose financial conditions and recent inflation increases suggest that the FOMC take a pause.

And, although Trump isn’t in the White House just yet, it seems likely that coming tariffs will combine with even looser financial conditions to boost inflation even more. Our inflation model indicates that December CPI (out Jan 15) will mark the 4th increase in a row: approaching 3% from the low of 2.44% in Sep.

Don’t look now, but the 10Y has reached our 4.4% target and is positioned for a potential breakout.continued for members… (more…)