"we are back baby!" - bulls rejoice

December 14, 2023

In their best Bradley Cooper Hangover impression..the bulls “are back baby!”

With the the FED essentially claiming inflation victory at yesterday’s presser, markets everyone rallied hard.

But will this be short-lived? Are the bulls ACTUALLY onto something?

We explain below…let’s dive in.

Impact Snapshot

  • The Fed held rates steady and indicated three cuts are coming in 2024.

  • U.S. jobless claims plunge to lowest level since mid-October

  • Decline in U.S. import prices complements cooling-inflation picture

Market Evaluation

The Fed held rates at 22-year highs as expected, but its signal that three cuts could be coming in 2024 was music to investors' ears.

Yesterday, the Dow closed at a record high, breaching 37,000, the S&P 500 inched closer to a record, and the 10-year Treasury yield approached 4%.

Chair Jerome Powell resisted grand pronouncements at the briefing, telling the assembled press bluntly: "We're not declaring victory."

The euphoria in markets on Wednesday was largely spurred by the final element of this outlook, with the Fed's latest "dot plot" suggesting three rate cuts of 0.25% each will be coming in the year ahead. 

All else equal, lower interest rates are positive for risk assets.

Markets Breakdown

Since the Sunday market update video we’ve made, we highlighted the importance of paying attention for a breakout. 

After spending about 3 weeks on the same consolidation phase, the market saw a breakout with the destination, another new year high.

When the market breaks from a balance area, it enters a state of imbalance with the price seeking a new range in order to find the next fair price for range-bound activity.

This is why the remarks of our follow up Market update video over on X, talked about “you don’t want to stand in front of a trend”.

As our comments suggested since the Sunday’s newsletter, the market is almost always waiting for some sort of catalyst in order to initiate a directional move, this week was filled with them.

The first thing we’ll be looking on the upside is seeing if the market is really that strong to continue the uptrend with enough momentum or to fall back to the multi balance area where it can offer range-bound activity. 

ES

The targets we look for until NY close & Targets to pay attention Tomorrow:

  • Upside Levels: 4796/4821/4853

  • Downside Levels: 4734/4708/4694

That’s all we got in this week’s Thursday brief.

As always, if you enjoy this Substack all we ask is that you share it with 1 friend.

We’ll see you on Sunday!

-The QuantVue Team