Weekly Stock Market Update & SPY Technical Analysis The “January Effect” refers to a historical tendency for stocks, particularly small cap names, to perform better in January than in other months. Who benefits from the January Effect?Small caps tend to benefit most because of timing. Around December / year-end, investors sell-off investors often sell off underperforming or losing positions to harvest tax losses. This selling pressure disproportionately impacts smaller, less liquid stocks, pushing prices below fair value. Once the calendar flips to January, that artificial selling pressure fades, fresh capital enters the market, and many of these same small-cap names experience a rebound as buyers step back in. We saw this happen in real time last week as markets pushed...
Weekly Stock Market Update & SPY Technical Analysis To everyone’s surprise, the U.S. economy grew far ahead of expectations per last week’s GDP report, which triggered a multi-day rally and pushed markets to record highs on Christmas Eve. Third quarter GDP came in at 4.3%, exceeding the 3.2% forecast thanks to strong consumer spending, exports, and government spending. Consumer consumption rose 3.5% annualized, driven by both services and goods. While exports grew sharply, helping add to overall growth. Consumer spending GDP breakdown: While the surface level numbers give a general picture, it’s important to dive deeper into the data. When we break down where consumers spent their money, we see that the leading contributors were health care, recreational goods, vehicles,...
Weekly Stock Market Update & SPY Technical Analysis The S&P 500 reaching a record 7,000 seems like a long shot at this point as markets head into the final full week of the year. Over the past few weeks and leading up to this point, delayed economic reports shed light on key data that went missing during the government shutdown, including critical inflation and unemployment statistics. Investors were hoping the data would carry markets higher, but skepticism around the validity of the data kept buyers at bay along with other factors. The data: Labor market - Fed Chair Powell’s exact words were that we’re in a “slow hire, slow fire” job market, where companies aren’t hiring much. The reason? Some...
Weekly Stock Market Update & SPY Technical Analysis Optimism grew in markets last week as positive headlines boosted confidence again, but a change of market leadership seems to be underway as investors make end of year adjustments. Leading up to last week’s interest rate decision, investors were highly uncertain whether or not the U.S. central bank would proceed with another rate cut or not. The uncertainty was a result of the government shutdown, which paused all economic data for September and part of October. Without knowing inflation and labor market data, there was no way to tell if a rate cut was appropriate. The Fed did cut rates by 25 BPS, which was followed by a press conference from Fed...
Weekly Stock Market Update & SPY Technical Analysis It’s been a quiet month for the market so far, but this week may bring on some fireworks as The Federal Reserve decides on interest rates. Probabilities of another interest rate cut this year have been violently swinging back and forth for weeks, and after a series of new economic data, odds of a rate cut are sitting at 86.2% at this time of this writing. The Fed doesn’t usually like to “surprise” investors so the chances are they’ll follow through with a quarter point cut as widely expected. What does this mean for us? Understanding the WHY behind the rate cut is crucial. The move to swiftly cut rates stems from...
