Market On Open - Wednesday 27 December
DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
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.