Technically Speaking – November

December 5, 2023

Long Term Resistance: SP500 4600 then 4685

Long Term Support: SP500 4425 then 4340.

Reward vs Risk Strategy is 6.5.  Scale 1 to 10 with Highest reward when we are at 1 and highest Risk when we are at 10.

Markets rallied the entire month of November giving us some relief from the August through October decline. The SP500 is trying to get back to the 2023 highs but has run into some resistance at 4600. The month of December is typically an up month and brings with it what’s called the Santa Claus rally.  No one knows for sure if the Markets will rally but my inclination is that they will. The big tech stocks have had tremendous increases, and most investors don’t want to have to pay taxes on short term gains and would rather wait until after year end. We have had a lot of reasons for the Markets to fall, but investors just don’t believe the Federal reserve Chairman will be raising interest rates again, in fact they are starting to believe the Fed will lower rates in 2024. I don’t adhere to that thinking. Powell has been true to his word of “longer for higher” and unless there is an economic collapse there is no reason to stimulate the economy. Raising interest is inflationary and that is the last thing the Fed wants to happen. Consumer spending will continue through the Holiday season. I believe most consumers will be tapped out and they will pull back so their bills can be paid. I don’t see a crash on the horizon, but I do see a pullback if company earnings start to decline. However, being a Presidential election year, I don’t see any sharp declines that might affect the election. Therefore, I would stay cautiously invested at least to the end of the year. If we continue higher and the risk becomes greater than the reward, I will start mitigating that risk again. When we feel our Reward/Risk meter is at 8 or above we will lower our risk exposure again and become even more cautious. Remember we will never sell everything, just increase the reward, and decrease risk when appropriate.