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High Tide Is 31 December At Midnight Eastern
Wherever in the world you may be, the high water mark for US equities if undiminished by external events shall be 31 December at Midnight Eastern. For that is the time when performance fee measurements crystallize into actual receivables for the half-starved, living hand-to-mouth inhabitants of Wall Street's Finest. Will it be a new yacht this year - or only another Hamptons mansion? Or, heaven forbid - merely token money. A mass-produced Porsche. That kind of thing. These are the critical questions as we career into year end.
Come January 1 I expect a lull in buying pressure; bigs will want the market to shed some gains so they can reload at lower prices, and will likely use a rush of retail liquidity (New All Time Highs, Buy!!!!) to shed positions near term to buy them lower later in Q1 2024. Here I assume that institutional volume in doing so outweighs retail buying volume, which ought to be true except there is truly an ocean of cash sat on the sidelines in retail money market funds, and there is nothing like an only-up market to attract that money in.
Personally my positioning into year end is - fully invested and unhedged long in single-stock accounts; hedged but significantly net long in the S&P500, Nasda1q-100 and Russell 2000, and naked long in the Dow Jones. From 1 Jan I plan to watch carefully; any drop I do not anticipate being a bear market but merely a way for bigs to buy lower. So I may add to shorts at that point to try to win from such a drop, but I will remain, as I have been in 2023, unafraid of underwater longs but very afraid of trapped shorts.
And with that - let's get to work. Below we cover the 10-year yield, S&P500, Nasdaq-100, Russell 2000 and Dow Jones - as always for the indices we provide our medium-term outlook using unlevered ETFs; short term outlook using futures; and actionable charts for the 3x levered long/short ETFs we cover.
Note - to open full-page versions of these charts, just click on the chart headings, which are hyperlinks.