“Walk a single path, becoming neither cocky with victory nor broken with defeat, without forgetting caution when all is quiet or becoming frightened when danger threatens.” ~ Jigoro Kano

Good evening,

As Fundstrat Head of Research Tom Lee has frequently written, what happens in the first five trading days of the year tends to show how the rest of the year will play out. At the close of trading this Monday, the fifth trading day of 2024, the S&P 500 was down 0.1% over this period (though up for the day). Should we view this as signal or as a mulligan? To Fundstrat Head of Research Tom Lee, “Our takeaway is that this is a mulligan.”

There are 20 precedents for the first five trading days of the year ending “nearly flat,” Lee told us, and only twice in history was this followed by a large down year (1957 and 1974). The country was in a recession both times; we are not, and do not expect a recession this year. A look at the other 18 instances shows that the odds favor double-digit gains for the year. Importantly, Lee continues to expect that the bulk of those gains will occur in the second half of 2024.

Head of Technical Strategy Mark Newton believes that caution is warranted right now. “The October-December surge has quietly been consolidating in recen...

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