Crucial Insights for Today’s U.S. Trading Session
As we approach the end of 2023, investors might contemplate staying on the sidelines given recent market fluctuations and the lofty expectations associated with the elusive Santa Rally. Nevertheless, the outlook seems positive for the upcoming Tuesday trading session in this abbreviated week. Following the release of significant inflation data, attention now turns to key indicators like U.S. housing data and weekly jobless benefit claims in the days ahead.
The prevailing theme in recent weeks centers around the anticipation of Federal Reserve interest rate cuts in the coming year, with projections suggesting up to seven cuts in 2024. Despite some cautionary notes about this optimism, short-term market momentum appears likely to persist as investors enthusiastically embrace the current euphoria, as per insights from The Kobeissi Letter’s Adam Kobeissi.
Kobeissi observes that the S&P 500 has displayed a clear disregard for overbought technical indicators, maintaining a consistent upward trajectory in price action. The strategist points to sustained optimism regarding geopolitical stability and the significant dip in oil and commodity prices as factors supporting equities into the New Year. Notably, crude oil prices have seen an over 8% decrease in 2023.
While Kobeissi acknowledges lingering concerns about inflation, he emphasizes that short-term market momentum is fueled by investor expectations of the impending shift in Fed policy.
Taking a closer look at the technical aspects, Kobeissi notes that the S&P 500 briefly surpassed 4,770 on December 20 before experiencing a rapid 80-point drop. As of the latest data, the index is a mere 0.8% away from its recent record close of 4,796.56 on January 3, 2022. Analyzing indicators like the daily RSI and Bollinger Bands, Kobeissi suggests that while some overbought conditions exist, the momentum signals remain robust.
Looking forward, Kobeissi anticipates a move into new all-time high territory for the S&P 500, projecting a breakthrough above the previous record of 4,818. He expresses a bullish sentiment with a target of 4,820 and a stop-loss at 4,690, predicting a potential move above 4,780 as early as this week.
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