Okay⦠[TradeSmith Daily]( Always Buy on Tay-Tayâs B-Day, Okay?
By Michael Salvatore, Editor, TradeSmith Daily An epic Wednesday rally with a strange correlation | The Fedâs punchbowl is back | An inflation nothingburger | A stock-pickerâs market in 2024 | Follow the Big Money to stay ahead…
Donât worry, that will probably be my most cringe-inducing subject line of the year. Well, no promises — thereâs still two weeks to go. What a week to cap off. Stocks positively soared after the Fedâs press conference. The Dow Jones Industrial Average rose 1.4% to set a record high on Wednesday, the first major index to do so since the beginning of the bear market in January 2022. The tech-heavy Nasdaq notched its all-time high the following morning. The S&P 500, as I write, looks like it shouldnât be too late to the party. Long-term Treasury yields continued their slide, with the 10-year slipping nearly 5%, and 2-year Treasuries nearly 7%. All this is to say, the market is looking mighty bullish. But as always, we wonât take that at face value. Letâs pick apart the last week in markets… RECOMMENDED LINK [With This Bubble, âWait And Seeâ Could Cost You Everything](
The concept of a âsafe portfolioâ is about to be completely redefined. For the last year and a half, everyone has been pushing their money into cash. But what if there was a hidden risk that was going to leave them exposed? Iâm not talking about the death of the dollar or anything silly like that. [On January 31st, the cash bubble is going to pop and many will be left reeling. I put together a free video for those who are willing to think outside the box](. First, letâs address that subject line
Editor-in-Chief Luis Hernandez shared an incredible study with me Wednesday morning, which should get all of us even more excited for the back half of December. Courtesy of Mike Zaccardi, CFA, CMT on Twitter:
First, the study. Mike shows that over the past 71 years, the traditional âSanta Clausâ rally doesnât happen all December long. Aptly, it comes most strongly during the back half of the month, with the returns on today, the 15th being about flat on average… but rising steadily to more than 1.5% before New Yearâs Day. This should excite us tremendously. Stocks have already risen 2.5% this month. If another 1.5% rally is in store, that means a stocking full of record highs to enjoy. Keep this in mind as we carry on through the finale of 2023. Especially with this momentum at our backs, you canât be faulted for holding a shamelessly bullish bias. A funnier side note to tie it all together is that Dec. 13, when Mike posted this, was Taylor Swiftâs birthday. With the rip-roaring rally we got that day, âalways buy on Tay-Tayâs birthdayâ may just become a new market adage. Weâll have to check in next year to see if lightning strikes twice. On Wednesday, Jerome Powell punched a code into a wall safe and pulled out…
The proverbial quantitative easing punchbowl, overflowing with the financial equivalent of bourbon-spiked eggnog. It was the third Federal Open Market Committee meeting where rates held firm at the target range of 5.25% to 5%. No big news there. The real goodies were in the Fedâs so-called âdot plotâ — which shows where Fed officials expect the federal funds rate to be over time. Hereâs the newest quarterly plot from the FOMC:
This chart shows that all but two party-pooper Fed officials see the federal funds rate going down by the end of next year. Most of them see the Federal funds between 4.25% and 5% by the end of 2024. Oneâs even eyeing a range of 3.75% to 4%. That means we should expect at least two, but probably three 25-basis-point rate cuts next year. Going out to 2025, most of the Fed thinks rates should be under 4%. In 2026 and beyond, consensus is weâll get back under 3%. The entire story of the bear market that started in 2022 has been higher interest rates weighing on growing companies. Borrowing expenses went up, so belts had to tighten. That sent share prices tumbling down. Fears of recession only added to the bearishness. And thus far, while a recession [does appear likely eventually, given history]( we still havenât seen one. Thatâs two hefty loads of ammunition for the bulls. As weâve been covering here continually in TradeSmith Daily, rate cuts are likely to be a boon for stocks in general, and small-cap stocks in particular. Youâll want to position accordingly for that potentially fast-approaching reality. Granted, Powell did leave open the possibility of further rate hikes should inflation stubbornly persist. Speaking of that… Not much surprise in the CPI
The inflation number was, mercifully, another ânothingburgerâ this month. For the most part, anyway. The year-over-year Consumer Price Index numbers came in at expectations: 4% on the âcoreâ measure, which strips out energy and food, and 3.1% overall. Energy prices fell, due to a continued slide in oil prices. Food elevated a little less than expected, and shelter costs remained the bane of every prospective homebuyerâs existence. What wasnât expected was a small, but not totally insignificant monthly rise of 0.1%. Inflation remains stubbornly lukewarm — thereâs that word again, âstubbornâ â and decidedly not at the Fedâs 2% target. The Fed has said time and again that the inflation fight will be long and not a straight shot down. There will be, to paraphrase, bumps in the road. This monthâs report seems like one of those bumps, and probably nothing so big as to derail the bullish train off its tracks. RECOMMENDED LINK [Massive âLightning Lineâ Rollout Underway Across America...](
Americaâs financial elite are engineering a sudden and surprising shift to the US money system. Itâs backed by the Treasury and Federal Reserve... and could trigger some very strange changes at your bank...
[And THIS little known US tech play is at the heart of it all]( Donât settle for buying âthe marketâ in 2024
So, we have quite a few bullish tailwinds at our back. How best to take advantage of them? For your active account outside your 401(k), you want to be buying the best stocks — especially small-cap stocks — and not broad index ETFs to make the most of the rally thatâs coming. Never forget that this is a market of stocks, not a stock market. The performance of individual companies is what charts the marketâs overall path. And the best stocks contribute the most to the overall marketâs gains. This year, it was the Magnificent 7 stocks. Next year, it could be something entirely different. Think of it like a football draft. Teams donât pick a hundred players at a time, assuming some patches of high quality among them. They pick just a few exceptional individuals who they think can make a big and immediate impact on the teamâs success. You should think of your portfolio the same way. The only stocks that belong there are the ones of sublime quality. The stocks with sterling fundamentals, positive forward outlook, bullish charts, and ideally a cheap valuation. We [talked about these types of stocks Wednesday]( by way of our Trinity screener (by the way, you can access that screener at any time through our free-to-use-for-now [TradeSmith Analytics dashboard]( The right Trinity stocks in the right sector could make a huge difference in your wealth next year. Look to that dashboard often. And speaking of Trinity Stocks… our resident stock-picking expert Jason Bodner agrees on one of them, but came to it in an entirely different way. Trinity Stock Williams-Sonoma (WSM) was on Jasonâs watchlist…
If you made the smart decision to join [Jasonâs Dark Pools Summit]( pre-event VIP list, you already know this. And hopefully, you learned about the 11 other stocks that he flagged as buys before the watchlist went away. And if you joined Jason for the Dark Pools Summit itself, you heard about his proprietary technique for spotting hidden money flows into the marketâs highest-potential stocks. Williams-Sonoma (WSM), with its Business Quality Score of 99, cheap price-to-earnings ratio of 13.67, and uptrend thatâs taken it 73% higher since May, is a hallmark of this potential. It also landed right in the sweet spot of Jasonâs Quantum Edge score — giving it two strong buy signals at once. [Jasonâs Dark Pools strategy]( is one of a kind. Iâve seen tons of different approaches to buying stocks — technical, fundamental, seasonal — but nothing quite like Jasonâs unique method for finding the biggest money on Wall Street, and simply buying the stocks where he sees that money flow. Institutional money flow is a powerful force that few get to see and experience firsthand. Jason did, and now heâs taken to sharing that experience with everyday investors. I urge you to check out the replay of the Dark Pools Summit while you still can. It wonât be online in its current form by this time next week. [So click here to check it out before that happens.]( To your health and wealth, [Michael Salvatore]Michael Salvatore
Editor, TradeSmith Daily Get Instant Access
Click to read these free reports and automatically sign up for research throughout the week. [25 Doomed Blue Chip Stocks]( [3 Stocks to Build Your Wealth in 2024]( [Download now on the Apple Store](
[Get It On Google Play]( [Customer Support: 866.385.2076](tel:+866-385-2076) | support@tradesmith.com
[Request Customer Service](mailto:support@tradesmith.com) ©TradeSmith, LLC. All Rights Reserved. You may not reproduce, modify, copy, sell, publish, distribute, display or otherwise use any portion of the content without the prior written consent of TradeSmith. TradeSmith is not registered as an investment adviser and operates under the publishersâ exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmithâs content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results. TradeSmith P.O. Box 340087 Tampa, FL 33694 [Terms of Use]( [Privacy Policy]( To unsubscribe or change your email preferences, please [click here](. [tradesmith logo]