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The stock market is boring right now, and that is not a bad thing. There’s a strong backdrop going into December. It was an extraordinary November. The S & P 500 was up 8.9%, its best month since July 2022, and the fourth-best November since 1950. If it doesn’t seem that way, it’s because the S & P has been flat for the past week and a half. It has been sideways since then, and sideways in a very boring way: The intraday volatility has been low, the VIX has collapsed and the put/call ratio is low. Bottom line: This is a great investing market and a terrible trading market. I say it’s a great investing market because the setup for December and into early 2024 is very strong. Strong seasonals December is the third-best month of the year, averaging gains of 1.4%, according to the Stock Trader’s Almanac. What’s different about this December is that it is a pre-election year, and December pre-election years are stronger than the other Decembers: up 2.9% on average, up 75% of the time since 1950. The first part of the month tends to be the weakest due to tax loss selling. The second half of the month is where most of the gains usually occur, particularly after Triple Witching (the quarterly expiration of individual stock options, option indexes and index futures, which happens Dec. 15 this year). Strong macro backdrop as well It’s not just seasonals. The macro backdrop is strong. November saw: Lower rates: The 10-year Treasury yields have gone from 4.9% at the start of November to 4.3%. Inflation continuing to moderate: October core PCE (ex-food & energy) came in line with expectations at 0.2% month over month and up 3.5% year over year. A little more than a year ago, in September 2022, it was 5.5%. Solid GDP growth: On Wednesday, third-quarter GDP was raised to 5.2% . The Atlanta Fed’s GDPNow tracker is predicting respectable 2.1% growth in the final quarter of the year. Moderating inflation: Solid GDP growth. Unemployment still low. That’s Goldilocks. No wonder Wall Street is bullish. Almost every Wall Street strategist is expecting higher stock prices in 2024 . Wall Street strategists: Year-end 2024 S & P 500 estimates Deutsche Bank 5,100 BMO Capital Markets 5,100 RBC Capital Markets 5,000 Bank of America 5,000 Barclays 4,800 Goldman Sachs 4,700 UBS Global Wealth Mgmt 4,700 Wells Fargo Securities 4,625 Morgan Stanley 4,500 JPMorgan 4,200 Source: MarketWatch Which brings us back to the market. It has been boring this week. There has been no volatility, but that’s good. A sideways consolidation after such a strong month is a good technical sign, and the market is not giving up a lot of ground on the downside. What we need now is new information. That’s the way the market works: Goldilocks is already priced in. We need more information like Salesforce. The tech giant was a big help to the Dow on Thursday, up nearly 8% to a 52-week high. Revenue was up 11% year over year. Revenue guidance for the fourth quarter is up 10% year over year, well above consensus. The company said they are going all-in on artificial intelligence and cutting costs, two magic phrases for tech investors. Once we get past the middle of December, sobriety will set in, of course. There will be lots of complaints about high valuations, and the cynics will be right: The S & P is approaching 19-times 2024 earnings. Any time you get in the 19-20 forward earnings range, there tends to be resistance. Either prices come down, or earnings go up. For the moment, let’s just enjoy the positive backdrop.
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