A 'Coming of Age' might be one way to portray what the US stock market says about the New Year. The idea that we've traversed a challenging time, with many 'emergency' measures after the 'Epic Debacle' (the forecast term we used a decade ago; which seems like yesterday) necessary, at the time.
There will be a 'transition phase' for equities as well as Government policies to be enacted and implemented. Healthcare and other laggard areas might just revive, while basic industrial, materials, infrastructure and technology, perhaps wane before they was strong anew. A rotational correction seems a bit more likely than either a disaster or phenomenal advance from here.
The market's evolution has been and might remain very much in-line with expectations of a 'brick-wall' of resistance, leading into a rolling correction, during January, especially ahead of the inauguration.
I'm thinking about several interesting events of the new month. One is Davos later in the month; and of course the new President's Inauguration. First up will be the Consumer Electronics Show.
While not attending personally this year (less need in the internet era; plus it's largely away from serious computing and toward autonomous mobility and a myriad of accessories and a blinding display of the latest flat-panels), I will highlight a few of the presentations and anything of market interest. In most cases, where a particular company's product rallies their shares right away, they often fade. That's a prospect for the market as this evolves too. (And if we were to begin by noting Apple, which doesn't exhibit at CES, has a prospect of cutting iPhone production by 10% in the 1st Quarter, that's very normal given the new-generation iPhone production being gear-up for. The shares should continue unwinding the recent rally just like the market.)
There's no change in our overall evaluation of short-term exhaustion which really commenced over a week ago; as was clearly anticipated with respectto both 're-balancing' / 're-allocation', and trade settlements for 2017.
Daily action pursued the extended pennant formation, on-top of a 'Trump Bump' flagpole as I termed it, throughout the year's final trading week. The efforts to 'box-in' the incoming Trump Administration seem to have been the focus of the market this week.
Next week may open weak and then try to rally; but falter. Any significant tax related selling is likely still ahead as while Friday's market faded, it wasn't all that dramatic. We suspect efforts to attack the upside will be limited for now.
Thanks for being with us during 2016; one of the most challenging years of recent memory for humanity; besides the economic and political temblors. I have tried to assess what I can (that may impact the market, as clearly the political issues did); and pledge to continue (hopefully a bit abbreviated form in 2017, given that despite the volatility ahead, the road-map is out there).
New Year's (final) MarketCast
Pre-final-hour (intraday) MarketCast
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