It has certainly been interesting and perhaps can be qualified as a difficult beginning for the year. Investors were expecting aggressive and frequent rate cuts. However, those expectations are having a reality check as employment data remains strong and the consumer report for December retail showed resilience.
Further, to add to investors’ headache, China’s GDP data suggests that growth has been slowing down despite stimulus policies taken by China.
Oil prices started to decline which could help inflation. This despite the ongoing geo-political situation in the red sea.
As we posted in an earlier article, we certainly expected the US December data to be strong because of the holiday spending, however the beginning of 2024 will reflect a different picture. This should push the fed to start taking action on the interest rates.
From a technical perspective we are in the all time high area of 2021 for the QQQ that was around the 405 area. This level has been breached in the last couple of days however, with the macro environment not favoring at the moment, we will certainly retest that line and it might end up a double top. This would translate to a formation of a resistance level that might be revisited around March.
