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Trends & Analysis
News

GBP/USD recovers following wage report

News

Buy the JPMorgan dip?

News

Goldman Sachs shares surge after earnings beat

News

Keep an eye on these key S&P 500 levels

News

US big banks report better-than-expected earnings

News

Crude oil declines on profit taking

Asset Watch

100 reasons to fear the NASDAQ?

Thursday, December 21, 2023

The all-clear has been signalled on Wall Street, as investors believe this bull market has plenty of room to run. Bank of America released its latest Global Fund Manager Survey on Dec. 19, and the report stated that institutional investors are the most overweight stocks since January 2022.
91% of those surveyed believe the Fed’s rate-hike campaign is over, and cash holdings are at a two-year low. On top of that, Piper Sandler’s Michael Kantrowitz (a notable bear) admitted, “I was wrong this year,” and “I’m trying to remain open-minded… and be willing to swallow my ego and not remain stubborn.”
Yet, when the crowd piles in and staunch bears throw in the towel, should that ring alarm bells?

The NASDAQ 100 has recouped all its rate-hike-induced losses, but resistance from the 2021 highs could create a double top pattern. More importantly, while the index has surpassed its July 2023 highs, its weekly RSI has made a lower high. And with bearish divergences often preceding pullbacks, weakening momentum could be the next correction catalyst.

Though December rallies are typical across U.S. equities, S&P 500 seasonality turns bearish in January. And as the NASDAQ 100 and S&P 500 share some of the largest players, both could be ripe for some short-term weakness.

So, should we expect a correction over the next month, or will the bullish stampede continue uninterrupted?


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