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Technically, our recent consolidation in US risk assets likely marks an attractive opportunity following the huge run-up into late December.  SPX has managed to alleviate near-term overbought conditions while weekly momentum and breadth remain bullish.  Trends in both US Dollar and Treasury yields remain lower despite recent bounce attempts, and an upcoming pullback in yields should coincide with Equities turning back up to test and exceed late 2023 highs.  Bottom line, this New Year’s hangover looks nearly complete

A few near-term Positives to mention:

  • RSI is no longer overbought on daily nor weekly timeframes on SPY and QQQ.
  • 2nd largest SPX sector, Healthcare, has just achieved a relative breakout vs SPX
  • Technology’s pullback failed to do any damage to its relative chart vs. SPX
  • Trends remain lower in Yields and US Dollar which is supportive of risk assets
  • Seasonality remains conducive to bullish gains
Many investors and strategists wondered if Small-caps might outperform in 2024 as interest rates started to recede and mean reversion helps to lift some of last year’s chronic underperformers.  ...

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