It was a flat week for the S&P 500 as it closed at 6,834, almost exactly where it closed last Friday at 6,827. However, there sure was a lot of movement in between, so lets dig deeper. On Monday the S&P 500 extended the prior Fridays greater than 1% loss with the tech sector again under pressure. Prior to Tuesdays open the November unemployment report came out showing an increase to 4.6%, up from 4.4% in September and marking the highest level since September 2021. As such the markets had a tough day as U.S. crude oil also came under significant pressure, falling to its lowest level since early 2021. Energy stocks suffered losses, and the S&P 500 fell for the third day in a row. Wednesday was dominated by sharp losses in leading semiconductor names tied to the artificial intelligence trade. As such, the S&P 500 had a daily loss of greater than 1% while the NASDAQ 100s daily loss was almost -2%. It should also be noted that the S&P 500 closed Wednesday at 6,721, down 180 points in the last four trading days since its last record high on Thursday, 11 December. Before Thursdays open Novembers consumer price index report showed a lighter-than-expected annual inflation reading of 2.7%, and that news led to a market rebound with the S&P 500 and NASDAQ 100 regaining most of the previous days losses. And on Friday that bullish march continued upward with the S&P 500 closing at 6,834, regaining 100 points in just two days and finishing the week in positive territory. For next week we have Christmas, but we also have the start of the Santa Claus Rally (SCR) period, which is the last 5 trading days of the year plus the first 2 of the New Year. This year it begins at 24 Decembers open, and lasts until 5 Januarys close. Historically, since 1950 the SCR has seen an S&P 500 average gain of 1.3%, and the rally has been positive about 79% of the time. However, the 2024 SCR did not quite fit that pattern and was more of a wild sleigh ride with four of those seven trading days having daily moves greater than 1%. It started out good on Christmas Eve 2024 when the S&P gained more than 1% and closed at 6,040. The day after Christmas was flat, but on Friday and Monday, 27 and 30 December, we had back-to-back daily losses of greater than 1%. Then add on another two days of losses on New Years Eve and 2 January, and the S&P 500 closed at 5,868. Finally, on 3 January, the last day for SCR, we did rally back with a gain of 1.26%. Not quite a peaceful time for the 2024 SCR, but hopefully the 2025 SCR will bring us a couple more days like this past Thursday and Friday and have us nipping at 7,000 on the S&P 500. For TSP TIPS we have seen a slight rotation as the I fund now has the highest Performance Ranking (PR) and Composite Score (CS). It also is best in the weekly higher highs/higher lows category. That said, the C and S funds are almost equal in PR and CS, and not to be forgotten, all three made new record highs just six trading days ago on 11 December. As such we are recommending the following investment mix change in all three models. Lastly, we would like to wish everyone a very Merry Christmas!!
It was a flat week for the S&P 500 as it closed at 6,834, almost exactly where it closed last Friday at 6,827. However, there sure was a lot of movement in between, so lets dig deeper. On Monday the S&P 500 extended the prior Fridays greater than 1% loss with the tech sector again under pressure. Prior to Tuesdays open the November unemployment report came out showing an increase to 4.6%, up from 4.4% in September and marking the highest level since September 2021. As such the markets had a tough day as U.S. crude oil also came under significant pressure, falling to its lowest level since early 2021. Energy stocks suffered losses, and the S&P 500 fell for the third day in a row. Wednesday was dominated by sharp losses in leading semiconductor names tied to the artificial intelligence trade. As such, the S&P 500 had a daily loss of greater than 1% while the NASDAQ 100s daily loss was almost -2%. It should also be noted that the S&P 500 closed Wednesday at 6,721, down 180 points in the last four trading days since its last record high on Thursday, 11 December. Before Thursdays open Novembers consumer price index report showed a lighter-than-expected annual inflation reading of 2.7%, and that news led to a market rebound with the S&P 500 and NASDAQ 100 regaining most of the previous days losses. And on Friday that bullish march continued upward with the S&P 500 closing at 6,834, regaining 100 points in just two days and finishing the week in positive territory. For next week we have Christmas, but we also have the start of the Santa Claus Rally (SCR) period, which is the last 5 trading days of the year plus the first 2 of the New Year. This year it begins at 24 Decembers open, and lasts until 5 Januarys close. Historically, since 1950 the SCR has seen an S&P 500 average gain of 1.3%, and the rally has been positive about 79% of the time. However, the 2024 SCR did not quite fit that pattern and was more of a wild sleigh ride with four of those seven trading days having daily moves greater than 1%. It started out good on Christmas Eve 2024 when the S&P gained more than 1% and closed at 6,040. The day after Christmas was flat, but on Friday and Monday, 27 and 30 December, we had back-to-back daily losses of greater than 1%. Then add on another two days of losses on New Years Eve and 2 January, and the S&P 500 closed at 5,868. Finally, on 3 January, the last day for SCR, we did rally back with a gain of 1.26%. Not quite a peaceful time for the 2024 SCR, but hopefully the 2025 SCR will bring us a couple more days like this past Thursday and Friday and have us nipping at 7,000 on the S&P 500. For TSP TIPS we have seen a slight rotation as the I fund now has the highest Performance Ranking (PR) and Composite Score (CS). It also is best in the weekly higher highs/higher lows category. That said, the C and S funds are almost equal in PR and CS, and not to be forgotten, all three made new record highs just six trading days ago on 11 December. As such we are recommending the following investment mix change in all three models. Lastly, we would like to wish everyone a very Merry Christmas!!