While the S&P 500 broke its string of four up weeks, it seemed to be in more of a take a breath mode closing at 6,051 on Friday. Monday and Tuesday the markets sold off slightly as investors were awaiting the inflation numbers. Before Wednesdays open Novembers Consumer Price Index (CPI) annual inflation rate came in at 2.7%, rising for a 2nd consecutive month but in line with expectations. As such the markets gapped up at the open with the S&P 500 making an intraweek high of 6,092. On Thursday the Producer Price Index (PPI) showed a 3.4% annual rate, the highest since February 2023 and exceeding market estimates of 3.2%. Putting pressure on the markets, the S&P 500 fell back to Mondays closing level. On Friday the 13th the markets rebounded somewhat but closed almost exactly where we were on Monday and Thursday. From a technical perspective, we mentioned that we saw a shift into the Large Cap Growth sector last week, and that shift continues to build momentum (Broadcom up over 20% on Friday) this week. Powering this advance has been the Magnificent 7, with Meta, Alphabet, Apple, Amazon, and Tesla (up 73% since 5 November), with all making 52-week highs this week. Pretty eye watering in how much the NASDAQ 100 has outdistanced itself from other indices as it has extended its weekly up streak to four. Conversely, the Dow Jones Industrials and Russell 2000 were down for their second week in a row, with the Dow falling for the last seven days, posting its longest run of losses since 2020. For next week well get a flurry of end-of-year economic news ranging from retail sales, to GDP, and the Fed Interest Rate decision. For TSP TIPS we have also seen a shift. Prior to this week, the S fund had been up for three straight weeks and in five of the last six. While it still remains at the top of the Performance Ranking leaderboard, this week we did see its price fall below its 20 day Moving Average, breaking that three week up streak, and also saw its Composite Score (CS) drop from 100. That said, C funds Composite Score remains at 100, and with the Mag 7 making up about 30% of the C/S&P 500 market cap, we are recommending the following new investment mix.
While the S&P 500 broke its string of four up weeks, it seemed to be in more of a take a breath mode closing at 6,051 on Friday. Monday and Tuesday the markets sold off slightly as investors were awaiting the inflation numbers. Before Wednesdays open Novembers Consumer Price Index (CPI) annual inflation rate came in at 2.7%, rising for a 2nd consecutive month but in line with expectations. As such the markets gapped up at the open with the S&P 500 making an intraweek high of 6,092. On Thursday the Producer Price Index (PPI) showed a 3.4% annual rate, the highest since February 2023 and exceeding market estimates of 3.2%. Putting pressure on the markets, the S&P 500 fell back to Mondays closing level. On Friday the 13th the markets rebounded somewhat but closed almost exactly where we were on Monday and Thursday. From a technical perspective, we mentioned that we saw a shift into the Large Cap Growth sector last week, and that shift continues to build momentum (Broadcom up over 20% on Friday) this week. Powering this advance has been the Magnificent 7, with Meta, Alphabet, Apple, Amazon, and Tesla (up 73% since 5 November), with all making 52-week highs this week. Pretty eye watering in how much the NASDAQ 100 has outdistanced itself from other indices as it has extended its weekly up streak to four. Conversely, the Dow Jones Industrials and Russell 2000 were down for their second week in a row, with the Dow falling for the last seven days, posting its longest run of losses since 2020. For next week well get a flurry of end-of-year economic news ranging from retail sales, to GDP, and the Fed Interest Rate decision. For TSP TIPS we have also seen a shift. Prior to this week, the S fund had been up for three straight weeks and in five of the last six. While it still remains at the top of the Performance Ranking leaderboard, this week we did see its price fall below its 20 day Moving Average, breaking that three week up streak, and also saw its Composite Score (CS) drop from 100. That said, C funds Composite Score remains at 100, and with the Mag 7 making up about 30% of the C/S&P 500 market cap, we are recommending the following new investment mix.