What. A. Month!

As of Friday's market close, the DOW, S&P 500, and Nasdaq have posted approximate gains of 8.9%, 8.9%, and 10.9%, respectively. This notable uptrend follows the Federal Reserve's two-day meeting spanning from October 31, 2023, to November 1, 2023. The published FOMC minutes from the meeting on November 14, 2023, reveal the committee's stance on maintaining a "restrictive" policy until further notice. Notably, the minutes disclose an absence of deliberation on rate cuts at present, affirming the committee's commitment to a steadfast target objective of 2%.

Individual sector performance ranked as follows:

• Real Estate - 13.69%

• Technology - 12.04%

• Consumer Cyclical - 10.76%

• Industrials - 10.32 %

• Financial - 10.07%

• Basic Materials - 10.00%

• Utilities - 5.9%

• Communication Services -5.89%

• Healthcare - 5.62%

• Consumer Defensive - 4.14%

• Energy - 0.18%

The Question on all investors’ minds, What’s next?

Traditionally, December has been characterized by a dynamic interplay of market forces, involving both pull and push dynamics. The deliberate arrangement of these terms, emphasizing "pull" before "push," serves to underscore the nuanced seasonality of the month. Following the typically favorable conditions for Bulls observed in November, the initial ten to fourteen days of December emerge as a phase marked by consolidation, profit-taking, and strategic repositioning in anticipation of the upcoming year.

These periods are accurately portrayed on the charts below:

In November, the market, notably in the final week, diverged from the 'Magnificent 7', yielding favorable returns for prudent, diversified investors. A screener of large and mega-cap stocks, each with a daily volume exceeding 1 million, is outlined below. While less liquid stocks may have shown higher performance, the 1 million per share baseline ensures ample liquidity for most investors to execute trades at their preferred prices. 

November 1 - December 1, 2023 Large/Mega Cap Stock Performance

• AFRM (Affirm) - 113.91%

• ROKU (Roku) - 73.43%

• COIN (Coinbase) - 71.91%

• PATH (UiPath) - 61.34%

• SQ (Block) - 58.79%

• IOT (Samsara) - 54.83% 

• SHOP (Shopify) - 51.38% 

• EXPE (Expedia) - 49.36%

• DDOG (Data Dog) - 48.09%

• ESTC (Elastic N.V) - 47.96% 

Noteworthy performance that did not crack the top 10 list:

• 15th - DKNG (Draftkings) - 43.22% 

• 18th -  PODD (Insulet Corp) - 39.55%

• 29th - UBER (Uber) - 30.85%

• 36th - SNOW (Snowflake) - 28.91%

*Generated through a Finviz screener. Actual performance may vary slightly +/-%

Momentum wields formidable influence, often propelling stocks with elevated momentum ratings to sustained climbs, transcending the constraints of technical and fundamentals. Attempting to halt a stock with substantial momentum is akin to restraining a 100mph train within a mere 20 feet—an endeavor highly improbable.

As investors, the imperative now is to exercise discernment and delve into which among these stocks exhibit further potential for growth. Notably, seven out of the top ten list comprise software companies, a trend that aligns with the prevalent dominance of technology throughout the year. The classification of Roku in entertainment, Coinbase in financial services, and Expedia in travel services underscores the sectoral diversity within the list.

Once a thematic trend or 'playbook' is identified, it often persists throughout the year, as vividly demonstrated in the aforementioned list. While some may highlight the earlier mention of 'Real Estate' as the top performer, it's essential to carefully weigh the available options.

1. Throughout the entirety of this year, technology has emerged as the prevailing theme, encompassing diverse facets such as semiconductors, software, hardware, and information technology.

2. The paradigm shift towards remote work, workforce streamlining, and heightened focus on efficiency metrics has reshaped the real estate landscape, leaving only a select few as notable victors.

3. The real estate sector, rebounding from a notably low point, is currently undergoing a rally that appears influenced, in part, by short squeezing dynamics and resistance faced by sellers entrenched in prolonged two-year short positions.

Can the ‘inertia’ persist for Real Estate? Certainly. However, my opinion for navigating this sector leans towards employing a well-balanced ETF approach, as opposed to attempting to cherry-pick individual winners. Notable examples include $VNQ, $XLRE, and $SCHH, all embodying the desired balance. For those seeking enhanced dividend yields, consider options like $REM and $SRET, presently delivering yields ranging from 7.8% to 9.82%.

Returning to the charts introduced at the outset of this article, I believe there is a strategic window to identify potential winners for the Santa Clause Rally. If your 'buy list' is not already compiled, I strongly encourage you to dedicate the upcoming week to discerning the momentum you intend to ride into the new year. Consider analyzing themes and industries poised to lead the way in 2024. While I don't dismiss the relevance of technology in diversifying your portfolio for the next year, I find it improbable that the 'Magnificent 7' will garner sufficient support and momentum for a repeat performance.

Ensure you subscribe to our articles! In the coming days, 'Bankfluence' is set to conduct in-depth analyses and offer insights into both short-term and long-term investment prospects. Whether you identify as a trader, investor, or fall somewhere in between, Bankfluence is committed to delivering content tailored for all profiles. Expect a comprehensive approach encompassing technical analysis, fundamental analysis, and nuanced explorations of micro and macro narratives.

Tonight marks a unique (heavy emphasis on unique here) occasion as I extend a spirited "Roll Tide" to all. Wishing you an exceptional Saturday ahead!