time to short this rally?

Evening team.

Back again in your inbox with another market brief.

We’ve had a wild rally heading into the holiday season with the bulls in total control of the markets.

But are we overbought? Will we see an equal retracement to the downside?

Let’s discus…

Impact Snapshot

  • Tomorrow: Consumer Confidence 10:00am ET

Market Evaluation

The Nasdaq set another all-time high while the S&P 500 added 0.6%, fast approaching the benchmark’s record peak. Dow has hit another all time high as well.

Equities have hit rally mode as of late, with last week’s indication of three likely interest rate cuts from the Federal Reserve in 2024 providing a catalyst for the market.

Signs of cooling inflation and a pullback in Treasury yields have also helped risk assets during what’s already a typically strong season for equities.

Eyes on tomorrows Consumer Confidence at 10:00am as market is anticipating the release of PCE inflation on Friday as another key catalyst for the market.

Markets Breakdown

There have been two consistent messages we’ve been highlighting since the previous weeks.

The first one is — don’t fight trends. The trend has clearly been to the upside. 

The second message is that the market is exhibiting a very poor underlying structure. Poor structure in the market can exist for some period of time. 

Multiple evaluations are ignored and this market is clearly driven by extreme fomo, with momentum traders pilling in on stocks and security assets. 

The greater fool theory of finance is in play.

This market price in the perfect economical outlook for 2024. You saw how the speculations “recession” was priced in early last year by “big economists” and how it unfolded into the biggest short covering rally this market has seen in some time.

You’ll know it’s getting late in the trend once your relatives start calling you to ask how to invest in stocks.

ES

The targets we look for heading into tomorrow’s session

  • Upside Levels: 4826/4853/4879

  • Downside Levels: 4762/4736/4709

That’s all we got for you today.

As always, if you enjoy these briefs all we ask is that you share our Substack with 1 (maybe 2) friends.

We’ll see you again on Thursday!

-The QuantVue Team