To The Moon

NewEdge Wealth Chief Investment Officer Cameron Dawson joined Benzinga’s Pre-Market Prep show Wednesday morning to discuss the recent rally in the stock market.

⚠️ Trading tips: looking at calls above 450 and puts below 448 on Thursday. Many Fed speakers lined up to move the market later. Avoid FOMO buy: more rewarding to buy the base, not the breakout but tons of patience required.

Consolidating for the next move

Dawson said that unlike last year when the market sold off toward the end of the year, this "Santa Claus rally" should last throughout the year and into the next. 

Dawson pointed out that strength in big-name tech stocks such as Apple Inc (NASDAQ:AAPL) and Microsoft Corp (NASDAQ:MSFT) will allow investors to hold their assets throughout the year and not cause tax-loss selling like the market encountered last year.

At the end of 2022, there was no "Santa Claus rally" to speak of and the S&P 500 dropped more than 6% in December. But Dawson says that this time around should be different. 

The market’s recent rally has been dizzying with the SPDR S&P 500 ETF (NYSE:SPY) up nearly 10% from its recent lows in late October. The market continued to move higher Tuesday on a cooler-than-expected CPI print. 

But, Dawson says that if the market does rally into 2024, investors will also need to reassess where the market stands. “Then it’s a matter of looking at earnings expectations,” Dawson said. “It’s really important to remember the market is always looking the next year forward.”

S&P is <2% shy of all time high 🚀

Tuesday’s upside could be a “bit of an overreaction,” said fund manager Louis Navellier. He expects the S&P 500 Index to bounce off the 4,500 level potentially. “But the trend is very positive, and the year-end rally is likely to draw in new funds, and there’s plenty on the sidelines,” he said.

Tom Lee of Fund Strat, who had the highest year-end target for the S&P 500 Index, said all rallies start with short covering, as he noted that beaten-down stocks advanced the most on Tuesday. “There is so much money on the sidelines that the inflows into year-end are going to create a lot of market breadth,” he added.

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