Last Trading Day of 2023 | Strong Year for Stocks | What to Look for Next Week

As 2023 ends and investors look ahead to the new year, the markets have a lot of positive activity to build on…

…consumers appear more confident, the Fed is signaling cuts are coming, the equities continue to make new highs. The Dow was up 13% in ’23 while the S &P was up 25% and the Nasdaq was even stronger with a 44% YTD increase. Will this continue in 2024? What impact will the election have on the market? When will the Fed cut rates?

All these questions are critical for traders to decide their path in the market this coming year.

As investors pick up where they left off next week, some areas I’ll be monitoring are bonds, metals and currencies – mainly macro factors in the short term. How bonds behave in January could be telling on how traders are anticipating the first quarter will go. Not knowing if the Fed will cut in March or wait till June will impact yields in my opinion. The Fed appears to be leaning towards three cuts in ’24 but when those cuts will happen is unknown. The metals will be an interesting play in the new year. Gold is moving higher even though there seems to be confidence in the stock market, so I read this as a trade conservative investors are using as a hedge in case there is a bigger market correction headed our way. Realistically this stock market rally can only go on for so long…but we have been saying this the past few years. An election year should add volatility to the market though. Another sector to focus on is the currencies. The Dollar, Euro and Pound will also guide investors in certain commodities and even the global markets. The Dollar could show traders how the world values the U.S. as a whole. The Euro could be another reason to have continued confidence in the European stock market. The Pound can and will directly impact many of the soft commodities. Cocoa was strong the majority of the second half of the year but faded as we closed out the calendar year.

Today, the last trading day of 2023, we saw a lot of red on the board. Grains were down, energies weaker, but I would think most of these declines were caused by short term profit taking with lower market volume.

A few areas to watch closely will be tech stocks, this sector really held the market up and led to the huge jump in the Nasdaq this past year. Also, AI stocks or AI related stocks should be something investors consider adding to their portfolio. Nvidia Corp was an active stock in ’23 and could be at key level of resistance heading into January.

Disclaimer: Past performance is not indicative of future returns. Opinions are my own. Profitable trades are not guaranteed.