Stocks extended their gains for another week, with the S&P 500 and Nasdaq both notching fresh records. That was in line with Fundstrat Head of Research Tom Lee's and Head of Technical Strategy Mark Newton’s expectations for a December rally. However, that's not to say Lee sees a straight upward path for stocks until Dec. 31. He doesn't, and neither does Newton.
"When you break down the S&P 500 into sectors and see that Financials and Industrials are down, that's interesting given that the market's at new all-time highs," Newton observed. "That doesn't mean we should be bearish per se, but we should stay vigilant instead of just concluding, 'Oh, the market's great.'"
Lee explained his view that we could see some bumpy weeks in mid-December: "We believe a few near-term headwinds could combine to create a fundamental 'zone of hesitation,'" he warned. These primarily revolve around market uncertainty around upcoming macro events, arguably the two most important of which are the November CPI report on December 11 and the Dec. 18 meeting of the Federal Open Market Committee (FOMC). "Once we are through this gauntlet, we expect the usual strong December seasonals to support stocks into year end," Lee said. "I think 6,300 is very doable," he suggested, "and I would suggest buying any dips that might occur before the end of the year."
Bitcoin crossed the threshold of $100,000 this week. Sean Farrell, Head of Digital Asset Strategy noted that "the reasons for constructiveness that we’ve been talking about for the past couple of months are coming together." Furthermore, in his view, "metrics like breadth, funding rates, and the amount of leverage in the ecosystem all suggest to me that this 'fruit' has a little more 'juice' to it – my base case is probably a couple more weeks. Stable coin creations are still solid. ETF flows are still solid. And we still have a Coinbase premium. So I’m not rushing to take off too much risk here."
Sector Allocation Strategy
These are the latest strategic sector ratings from Head of Research Tom Lee and Head of Technical Strategy Mark Newton – part of the December 2024 update to the FSI Sector Allocation Strategy. FS Insight Macro and Pro subscribers can click here for ETF recommendations, precise guidance on strategic and tactical weightings, detailed commentary, and methodology.
What is FS Insight?
FS Insight is a market-leading, independent research boutique. We are experts in U.S. macro market strategy research and have leveraged those fundamental market insights to become leading pioneers of digital assets and blockchain research.
Tom Lee's View
Proprietary roadmap and tools to navigate and outperform the equity market.
Macro and Technical Strategy
Our approach helps investors identify inflection points and changes in equity leadership.
Deep Research
Our pioneering research provides an understanding of fundamental valuations and risks, and critical benchmarking tools.
Videos
Our macro and crypto videos give subscribers a quick and easy-to-understand audiovisual updates on our latest research and views.
US Policy Analysis
Our 40-year D.C. veteran strategist cuts through the rhetoric to give investors the insight they need.
