Testing New Support, Inflation Prospects, Economic Normalization in 2024 and One New Buy

January 7th, 2024 Update

Let's begin with the Equal Weight SP500: we're now outside the consolidation box I've been monitoring for several months. The question remains: will we test the upper boundary of this box as a new support zone? We'll need to wait and see. Notably, the volume was high, confirming some selling pressure after the recent strong rally. No assumptions here; it's wiser to err on the side of caution until proven otherwise.

Turning to the daily chart of the 10-year treasury yield, which moves inversely to the SP500, rates have been climbing. As I've mentioned in previous posts, my expectation is for rates to either move sideways or decline once more, contingent on inflation expectations and the actual inflation trend.