The prevailing sentiment in the market is one of neutrality and apprehension. Anticipated fragility leading into December aligns with a cautiously optimistic outlook for a bullish trend in early 2024, contingent on geopolitical factors and financial variables not disrupting this trajectory. The S&P is showing signs of stretching, with the possibility of a forthcoming dip.
In terms of smaller stocks, some risk has diminished, yet the potential for fluctuations and interruptions persists, particularly during a potential first-half pause in December. This situation presents a dilemma for those seeking tax losses while considering the same stocks for anticipated gains in early 2024.
The current mixed market activity can be attributed to tax implications and the 30-day ‘wash-sale’ rule. For retirement accounts, which typically do not incur tax consequences until withdrawal at older ages, there may have been strategic selling in previous months to facilitate position replacement within the regulatory framework.
The market session has been characterized by selective gains and losses, with the Index influenced primarily by the performance of the so-called ‘magnificent seven.’ Other stocks either respond to individual news, which has been relatively insignificant today or exhibit aimless movement. The S&P remains within an extended range, potentially leading to exhaustion.
After the close, notable news surfaced regarding Mark Cuban selling ‘control’ of the Dallas Mavericks to the Adelson family. While the majority ownership shifts to the Adelson family, Mark Cuban retains a minority stake and control over the team. This unconventional arrangement raises questions about potential future developments, such as a move to Las Vegas, consistent with long-standing rumors of an NBA expansion team in the city.
Murmurs suggest that the Fed might cut rates ‘early in 2024,’ a factor that could influence market behavior in the first half of December. Additionally, there are credible rumors that Apple is considering a shift from its partnership with Goldman Sachs for AppleCard to American Express, although details and confirmation are lacking.
It is advised to refrain from chasing expensive stocks, emphasizing maintaining a ‘core’ portfolio comprised of well-established big-cap stocks while selectively engaging in speculative stocks for entertainment purposes.
In summary, the market is underpinned by expectations of rate cuts in the coming year but remains cautious about short-term business prospects. The S&P is marginally ahead of its anticipated position, while the broader market continues to experience a period of stagnation.