BS Baffles Brains

December 2, 20231 Comment

Don’t trust the media. Don’t trust sell side research.


The headline: S&P 500 RISES 8.9% FOR BIGGEST MONTHLY GAIN SINCE JULY 2022. Dow Jumps 500 pints to new 2023 high.

The Reality (Headline SHOULD say): S&P 500 still below its summer 2023 high and way below January 2022 high of 4818

Headlines used to focus on the SPX when tech was strong. However, since (as I warned you would happen) the tech sector has had lame performance, the media has turned to the more diversified Dow to spin the vibe. They need headline bait, and the they are tied into Wallstreet’s sell side to pump whatever they can pump.

True, the Dow Industrials are eking out a yearly high (less tech concentration). Yet, it is still below its 2022 highs from almost two years ago!

The SPX, with its huge tech focus, is not at 2023 highs, and is substantially below the January 2022 highs.


Thoughts to ponder

I believe there is probable “buyer exhaustion” going on here. This, based on technical indicators on the chart below.

Note as well that the first two weeks of December can be a little soft from a seasonal perspective. From there, we often see a rally into early January (Santa rally), followed by choppy markets before the next major period of outperformance begins in March. I’ve annotated the EquityClock graph with these observations:




My experience suggests that we should always choose to ignore the headlines, lest  they influence us in our market analysis. There’s little doubt that the market is overbought.  The rally has likely reached an exhaustion phase. This lines up with a seasonal tendency for a brief period of weakness in the first part of December. I’m looking to add to positions if that happens, although I am well aware that the early months of winter, while not seasonally weak, can be less predictable.

I hold out that SPX 4800 is likely to be seen before next spring. Once that level is tested, it is to be seen if price can break materially past 4800. My bet is not. But that’s just a guess. My guess should be taken with the same grain of salt as the media headlines! We must adhere to our trading rules – as explained in my Online TA course. Which, as you saw in last weeks blog, is on sale this month.

Happy trading!


One Comment

  • Your article is food for thought, certainly. Common wisdom suggests key ingredients of a rising stock market is a huge amount of disposable income, or buying on margin at zero or negative real interest rates. Neither is the case. Unemployment is rising, families are strapped for cash tou pay for food and rent. Housing and mortgages relatively unaffordable due to paralyzed construction from borrowing rates not allowing a decent rate of return for builders. Also, market movers are limited to a handful of speculative FANGLE stocks, paying no dividends. In other words, a bubble. Even if markets rise, the return is a bit of a mirage, of a non-existent oasis. Canadian corporations, generally, do not have fat wallets or profit margins.

    As you say. in this casino, the one not spewing his or cash at the gambling tables, is the one finishing the night with the most loonies and dollar bills, versus exiting broke, walking home


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