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Weekly Economic and Stock Market Commentary – January 16, 2024

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As for the stock market specifically:

The markets rose again after beginning the year on a down note. For those keeping score, two of the three versions of the January barometer ended on the negative side of the ledger.

Another seasonal trend not working, so far, this year is the January effect. That is the tendency for small company stocks to do well, while large company stocks lag.

Let’s not get too wrapped up in what the rest of the year will provide after 2 weeks of trading.

The bullish percent indicators declined last week. The main risk-assessing tools currently are positive, but a number of short-term indicators turned negative. Since this is football playoff season, we have a 3rd and 5 at the opponent’s 40-yard line. In football terms, we try to get the first down. If we get the first down, we go for the touchdown. If we gain some yardage, but not enough, we can kick a field goal. If we lose yardage, we will punt, and play defense. We currently are in WEALTH ACCUMULATION mode.

Remember, Xs means OFFENSE or wealth accumulation, while Os means DEFENSE or wealth preservation.

Below is where our indicators stand as of January 12, 2024 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Labor announced that the December Consumer Price Index came in higher than expected in the 4 major measurements. Prices rose 0.3 percent from November vs. the estimate of a gain of 0.2%. The yearly rate was 3.4 percent compared to an estimated rate of 3.2 percent. At the core level, there was a gain of 0.3%, which was the expected increase. The one-year core price increase was 3.9 percent, compared with an estimate of 3.8%.

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