I hear lots of folks pointing out flaws in the markets, but I remind people that late Q4 declines from new highs are extremely rare. Cracks usually continue into the new year before any kind of meaningful pullback is seen. Sure, we can get a 2-3% pullback anytime and certainly between now and the 20th. However, you know my thesis. Buy weakness until proven otherwise. Let’s not overthink nor complicate this.

Below is the yield on the 10-Year. It had a nice pullback from 4.5% to 4.2%. It is set up for yields to move higher over the short-term which could cause stocks to get a tiny bit cranky. A move above 4.5% again and that could be the catalyst for the decline I see setting up in 2025. Of course, we will hear that if yields go up for the “right reasons”, that’s good for stocks. Until it isn’t.

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Also supporting my thesis is the dollar which had an epic rally and is now pulling back. If the buck gets going again, that could also pressure yields to move higher and stocks to pull back.

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The ole Super 7 or the sexy AI stocks got some love yesterday and that trend should continue today. I do not think the market is going back to that theme. I do think the broad market including the mids and smalls will get more love after this week.

On Monday we bought more IYT and XOM. We sold QDEC, some KIE and some XLF. On Tuesday we sold some QQQW.

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