Market Briefing For Tuesday, January 2

The ‘burden of proof’ validating the projected – but oddball – late 2023 S&P upward behavior, which dragged the rest of the list to a broadening stability or at least nominal movements off the lows for a majority outside the mega-caps, is a really likely challenge as we migrate tenaciously into a new trading year.Come to think of it, to be humorous, this past year was a ‘drag market’ that’s likely ending, as the last couple month’s action tried bringing the ‘list’ out of the closet so to speak. After all this was a glorious S&P move that largely was a charade when it comes to reflecting an overall market that was suppressed.And therein lies the ‘catch-up’ requirement for 2024: whether or not the recent broadening-out (which is really minor off the lows for most stocks) can truly be the start of a blossoming, which delivers superior small-and-mid-cap gains.On a more serious tone, ‘geopolitical risk’ remains at the height of concern as to ‘risks’. While Oil did not respond ‘much’ to the Gaza attack on Israel; that’s likely not the case if we get into a fight with Iran on a far-larger scale.Many seem to forget the triggering of this war was Hamas not Israel; although there’s a debatable case to be made for local disputes with West Bank settler claims. But that didn’t merit a moral equivalence or justification for the Hamas murder spree; nor did any of that merit Wall Street calls for $150/bbl Oil price increases. However, broad war with Iran could shoot Oil over 100/bbl and the S&P (as well as inflation-mitigation hopes) could be temporarily thwarted.The Iranian-backed aggression by Yemen Houthi forces (rebels or government, as seems too assertive to be just ‘militants’.. a phrase I disdain) already has a slight impact on Brent Crude prices; so far not that much on WTI; but pending.Market X-Ray appreciates the challenges of the year just past; and looks to a choppy start but subsequent stabilization or even robust action in 2024; with a proviso: we must get through the Middle East war without conflagration and dramatically higher Oil prices; plus progress mediating Ukraine would help. At the moment the reticence of Washington to provide more aid to our friends is a detriment to progress (and encourages adversaries); but that’s a bit murky.The tricky part of the first couple weeks of 2024 may be if a lifting of pressure on small-caps actually allows more upside breathing room; ‘even if’ mega-cap leaders settle-back (with some ‘tax-gain’ selling) in a new tax year. Thereafter a move more in unison may be predictable; but let’s assess as this unfolds.I know ‘ascending wedge’ patterns ultimately resolve negatively (short-term in any event); but usually the participation has been even broader for far longer.Consternation near-term aside, it’s clear not only we called October’s low, but that the Fed has pulled off their plan, with a sort-of softish economic landing.Again we’ll make this a brief commentary, given the 2024 known-unknowns everyone has assessed from every perspective. You know our view, subject to revision as more evidence of the global picture evolves; and it’s an Election year; which ‘normally’ is favorable for liquidity and stocks, but not assured.Incidentally, one member asked why I have not picked a ‘favorite’ stock for a New Year. Primarily because prospects are often mixed for the bigger ones as well as pending for some smaller stocks. It’s not about monetary policy now; it is about corporate decision-making and revenue flow in most cases.Also, since our bigger stocks (like Apple, AMD, Intel, Chevron, ON, Texas Instruments, etc.) are already expensive and offered periodic entry points; it’s not too wise to be chasing recent advances this late in a short-term cycle possibly. It does not mean they won’t see higher prices later. Smaller stocks can outrun them proportionately, ‘if’ the specter of consolidation in big-caps is ignored in the new year’s first weeks.The idea has been to hold ‘cores’ in big-caps or long-held stocks; and sprinkle a selection of small-caps as speculative plays. No need to single one out as it would imply a concentration in such stocks, rather than spreading out a bit. The big determinant next year might be stable Oil prices. Given the U.S. is a self-sufficient producer (despite efforts to block that)Bottom line: geopolitical and domestic terror risks loom; along with Election Year freneticism that tends to have limited impacts on markets. But maybe we must emphasize the U.S. ‘Border Situation.’ Yes, most are just looking for better life; but the percentage of ‘other’ motives is unknown; even dangerous. Also becomes sort of a ‘trigger-factor’ to agitate the domestic population who already tends not to take things for granted, and cognizant of ‘situational awareness’ needs we never thought much of anything about in my youth or the ‘shining light on a hill’ era. Now Biden Administration officials seem to finally know they must get a grip before something blows-upWith that said; more later as we migrate into more uncertainty; but that also is a reason there are and were fairly high short-sale levels, which capitulate and help fuel the upside in a stock or Index, until of course a flock of black swans does more than circle the area. Stay tuned with fingers crossed for 2024.Happy (if somewhat apprehensive) New Year!More By This Author:Market Briefing For Thursday, December 28
Market Briefing For Wednesday, December 27
Market Briefing For Tuesday, December 26


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