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“If we all worked on the assumption that what is accepted as true is really true, there would be little hope of advance.” – Orville Wright
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Equity futures are firmly lower this morning even after headline Retail Sales for November came in better than expected. The S&P 500 is indicated to open down about 0.4% following more modest declines in Europe this morning and Asia overnight. There are additional economic data points on the calendar for today, including Industrial Production, Capacity Utilization, Business Inventories, and Homebuilder Sentiment, but the main area of focus will shift to tomorrow’s Fed decision and subsequent press conference where the market increasingly expects a more hawkish tone and dialing back of rate cut expectations.
There are too many memorable episodes to name when it comes to the show Seinfeld, but 27 years ago tomorrow (12/18/1997), the famous Festivus episode aired during the show’s last season. Everyone remembers the main Festivus plotline of the episode and the infamous airing of grievances. Another episode subplot concerned Jerry and his girlfriend Gwen, whom he met at his friend Tim Whatley’s (played by Bryan Cranston) Hanukkah party. As they see each other more often, and Jerry introduces Gwen to Kramer, he realizes that in some situations and lighting (like when he first met her at Tim’s party) Gwen looks great. In other situations and lighting, though, she looks entirely different and less attractive.
Gwen is today’s stock market. After closing within 0.3% of its all-time high yesterday and posting a month-to-date gain of 0.7% so far, the market looks great this month, just like a typical December.
Looking at it in another light, though, things look very different. On an equal-weighted basis, stocks in the S&P 500 are down an average of 3.2% this month, and the S&P 500 Equal Weight ETF (RSP) has closed lower than it opened for eleven straight days taking it below the 50-day moving average in the process.
Similarly, the Dow Jones Industrial Average has been showing similar weakness. Like the equal-weight S&P 500, the Dow has been consistently trading lower this month, and while it has managed to maintain its uptrend and hold above its 50-DMA for now, it has also traded consistently lower for most of the month.
In fact, through yesterday’s close, the ETF that tracks the Dow (DIA) has traded down on the day for eight straight sessions. That’s tied with three other streaks for the longest in the ETF’s history, and the three others that lasted as long ended in June 2006, August 2011, and most recently June 2018. There’s a lot to be thankful for in the market this year, but unless the internals can pull off some major feats of strength in the coming days, investors will have plenty of grievances to air at this year’s Festivus table.
