AVGO X'mas Rally - Going Strong or Tapering ?

Stock indexes on Friday settled mixed, with the Nasdaq 100 posting a new all-time high and the Dow Jones Industrials posting a 3-week low. 

When 4pm came around:

Dow Jones:

• -0.20% (-86.06 TO 43,828.06).

• Slid for a 7th straight day, longest losing streak since 2020.

• For the week, the Dow posted a -1.8% decline.

S&P 500:

• -0.00% (-0.16 TO 6,051.09).

• Ended Friday’s session little changed.

• Index posted 8 new 52-week highs and 15 new lows.

• For the week, it slid about -0.6%, effectively ending the 3-week winning streak.

• Since its inception in 1957, the S&P 500 has returned +10.23% a year on average.

Nasdaq:

• +0.12% (+23.88 to 19,926.72).

• It recorded 75 new highs and 199 new lows.

• For the week, the tech index rose +0.3% during the period.

Trading volume on US exchanges amounted to a thinning 12.56 billion shares.

Compared with 14.03 billion averages for the full session over the last 20 trading days.

$Broadcom(AVGO)$ - Friday Tech Hero.

Technology sector rallied on Friday, led by strength in chip stocks, as Broadcom:

• Latest quarterly earnings powered up to $14.1 billion.

• It also surged more than +24% after predicting sales of its AI products will surge +65% in the fiscal first quarter. 

Broadcom reached a market cap of $1 trillion, rallying more than +24% after posting fiscal Q4 adjusted earnings that beat estimates and reporting that artificial intelligence revenue soared +220% for the year.

Looking at AVGO past month performance (see above), do you think the 12 Dec 2024 spike ‘growth’ will persists or is it only a short-term euphoria ?

Overall thots: it is evident that AI take up is firming. It will be a long term play as adoptions broaden and permeates across sectors / industries gradually.

Week’s Economic Reports.

As the Fed’s FOMC convenes over Dec 17-18, economic reports continued its planned release:

• Mon, 16 Dec 2024 - S&P flash US services & manufacturing PMI.

• Tue, 17 Dec 2024 - US retail sales for November 2024.

• Wed, 18 Dec 2024 - FOMC interest rate decision & press conference.

• Thu, 19 Dec 2024 - US weekly jobless claims.

• Thu, 19 Dec 2024 - US GDP Q3 2024 2nd revision (finalized).

• Fri, 20 Dec 2024 - US November 2024 personal consumption expenditure (PCE).

None of the reports before 19 December have a significant influence over the Fed’s interest cut decision.

Friday’s PCE report should influence overall market sentiments and on the run up to Christmas week.

CME FedWatch Tool:

• As of 16 Dec 2024, Wall Street is still 96% confident that the Fed will proceed with a final -0.25% interest cut to end off the year.

Coming Week.

According to Piper Sandler:

• Stocks may be due for more upside in the coming weeks.

• Approaching mid-December, Equity markets remain constructive within their primary uptrends into year-end, said Chief market technician, Craig Johnson.

• He predicted a year-end S&P 500 target of 6,100. Based on Friday’s closing, its only 49 points short.

• His year-end 2025 target for the broad market index is 6,600.

Naysayer Cautions.

There are warnings fired off too.

Fairlead Strategies, Founder & Technical strategist, Katie Stockton has cautioned:

• She’s expecting a strong finish to the year, 2024.

• A likely correction, coming in Q1 2025.

• US market Intermediate term momentum is still (very) strongly positive, with fresh breakouts from some large-cap names.

• Those breakouts can contribute to a little upside follow-through before a corrective phase in the first quarter

• Her advice — Keep eye out on sell signals.

• Perhaps hold off on new purchases, except wherethere are those breakouts or some kind of near-term catalyst to take advantage of.

• Definitely great to have some cash to put to work when that first correction arrives.

Are you facing a ‘dilemma’ (like me), wondering if taking profit is the best approach or take a risk on reacting to possible market correction, with the hope securing higher returns, in exchange?

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• Do you think Broadcom will continue to power higher and break thru resistant price of $231.96 ?

• Do you think it is better to take profit while still ahead OR just risk it for even higher returns?

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