Tuesday Market Outlook: December 5, 2023

[Image] Tuesday Market Outlook: December 5, 2023 As we enter a new week (and a new month), the market is exhibiting some serious changes. Yesterday, we saw widespread selling across a lot of different industries for the first time in a while as the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) dropped 0.69%. Notably, this selloff happened without a serious rise in interest rates. This might mean that the market is getting exhausted, but it's still full of surprises. A good example of this is the price of Bitcoin (BTC), which recently shot up past the $40,000 mark. So, considering the surprising nature of these moves, what am I focusing on this week? Keep reading to hear my Tuesday Market Outlook… 2 Major Economic Reports to Watch This Week I'm really curious to see the results of two major economic reports. First up, we've got the ISM Manufacturing Index—also known as the Purchasing Managers' Index (PMI)—a monthly indicator of U.S. economic activity based on a survey of purchasing managers at more than 300 manufacturing firms. In short, these numbers give us an idea of how well the manufacturing and business sectors are doing, thus telling us a lot about the economy’s health. Later in the week, the U.S. jobs report is due. This report is super important because it sheds light on the labor market. It also gives us a peek into how strong consumer spending power is, especially as we enter the holiday shopping season. Looking Ahead to S&P Rebalancing Next, I’m keeping a close eye on December 15. (I know this isn’t until next week, but you should be aware of what’s going to occur ahead of time.) That’s a big day for the stock market because it's when the S&P 500 rebalances, or updates its list of holdings. In other words, some companies will be removed from the index while others will be added. I want to see if the big Wall Street order flows create dislocations, which could lead to great overnight fades in certain stocks… When a company is added to the S&P 500, the share price often goes up because big investment funds that follow the index need to include these stocks in their portfolios. But when a company is removed from the index, its stock might be sold more for the same reason, leading to a potential drop in its price. One of the headline stories of this rebalance is Uber Technologies Inc. (NYSE: UBER) getting added to the S&P 500. This is a really big deal for Uber, as evidenced by the stock’s 23% surge in the past month. But it's not just the big players like Uber that are interesting… The smaller companies that are either being added or removed from the S&P 500 could also be worth looking into. Sometimes, these less well-known companies can offer great opportunities for smart traders with lower implied volatility (IV). These rebalancing changes can lead to quick—and most importantly, predictable—ups and downs in stock prices, creating clear chances for you to profit. What This Means for Your Trading So, what does all this mean for your trading this week? The market is going through a time of ups and downs, and keeping an eye on things like the ISM report, jobs numbers, and the S&P 500 rebalance can give us good hints about what might happen next. Being well-informed and ready to act quickly is key to doing well in this kind of market environment. Aside from these big events, it’s also crucial to understand the big picture. The stock market can be affected by many things, like what’s happening in the world, changes in technology, or even trends in what people like to buy. All these factors can cause stock prices to move in different directions. For example, if a new technology comes out, companies involved in that technology might see their stock prices go up. For example: As artificial intelligence went mainstream in 2023, Nvidia Corporation (NASDAQ: NVDA) surged more than 215%! Additionally, if there’s a big global event—like a foreign military conflict or a natural disaster—it can affect how market participants feel and trade. Closing Thoughts In the stock market, timing is everything. It’s not just about what stocks you buy, it’s about when you buy or sell them. That’s why I write these Tuesday Market Outlooks, so that you’re aware of what’s happening (and can maybe even profit from the information). By staying informed about economic reports, paying attention to market changes, and keeping an eye on the bigger picture—I bet you’ll become a better trader. As always… Stay Street Smart, Jeff Zananiri P.S. Discovery how Tim Sykes’ brand-new AI trading algorithm—XGPT—is crushing the markets! 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