Magnificent Seven ready for Christmas Rally?
Half Day Trading.
Despite a truncated Christmas eve trading session, Wall Street's main indexes all closed higher on Tues, 24 Dec 2024.
Gains in Mega cap & growth stocks bolstered the benchmarks by US ET 1:00pm: (see above)
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DJIA: +0.91% (+390.08 TO 43,297.03). Scored 4 straight sessions of gains.
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S&P 500: +1.10% (+65.97 TO 6,040.04). Scored 3 straight sessions of gains
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Nasdaq: +1.35% (+266.24 to 20,031.13). Scored 4 straight sessions of gains.
Like Mon, 23 Dec 2024 tech stocks (XLK & XLC) continued to drive the market today, with finance stocks (XLF) joining the fray. (see above)
All the so-called Magnificent Seven Mega cap technology stocks climbed on Tuesday, led by the +7.4% jump in $Tesla Motors(TSLA)$. (see above)
In fact, since 04 Nov 2024, Tesla took a “turn” for the better when ex-President Trump won the election.
Tesla owner “strategic investment” of his personal wealth in money-politics, got him the upper hand.
Other 2 Mag-7 stocks that had a good run on Tuesday were:
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$Amazon.com(AMZN)$ (+1.77%).
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$Meta Platforms, Inc.(META)$ (+1.32%).
Magnificent 7 Influence.
Given their outsized influence on markets, their performance is often a key driver of indexes.
Just look at Magnificent Seven’s growing “influence” on the S&P 500 index over time. (see below)
US New Home Sales - November 2024.
The 2nd economic report released after CB Consumer confidence report was US new home sales. (see above)
Based on data released by US Census Bureau:
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In November 2024, sales of new single-family homes reached a seasonally adjusted annual rate of 664,000.
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This marks a +5.9% increase from October’s revised figures (627,000).
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YoY, it was +8.7% rise from November 2023.
It will be unwise to draw favourable conclusions from just, one good month of data.
Definitely need a few more readings to conclude.
However, it could be inferred that (a) buyer confidence has increased, (b) housing market remains relatively healthy, (c) if sales continue to pick up, it bodes well for the economy.
Santa Rally Happening?
Below are some technical signs that the so-called “Santa rally” has arrived.
(1) Big Tech Stocks Lead.
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Large tech companies are driving the stock market right now, and investors are heavily invested in them.
(2) S&P 500 Above 200-Day Average.
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The S&P 500 has consistently stayed above a key technical level in 2024.
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Historically this could imply, lower returns in 2025.
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Sizable gains in the past 3 trading sessions have put the indexes back on the path toward their record highs, from which they took a Fed-fueled nosedive last week.
(3) Investor Activity.
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Bank of America clients have been heavily buying US stocks, particularly large companies.
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In fact, BofA clients have bought US shares for seven consecutive week.
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Similar to the prior five weeks, clients bought (a) single stocks and (b) exchange-traded funds (ETFs), with bigger inflows into the former.
**Note - remember that past performance is not indicative of future results.
Million Dollar Question.
Actually, there is a more important question - “What is going to happen when Santa rally is over ?” (after Fri, 03 Jan 2025).
To have a technical inkling, could refer to the "January Barometer"“.
This was a term coined by Yale Hirsch, creator of the Stock Trader’s Almanac, in 1972.
The hypothesis is US stock market’s January performance predicts the year’s performance.
January Barometer Accuracy.
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Since 1945, when US stock market went up in January, the average yearly gain was a very good 18.3%.
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However, if January saw a decline, the average yearly return was actually negative.
Now, this is something we could do and pay attention to — how the market starts the year could be a helpful clue for long-term investment and investors.
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Do you think Christmas rally is upon us and we should take selective profits ?
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Do you think the January Barometer is useful for individual investor like us?
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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