EB Daily Market Report - Quick Update - Tuesday, December 17, 2024

Max Pain Event

We will be hosting our December "Max Pain" event in a little more than an hour, at 5:00pm ET. Room instructions were sent out separately this morning. We'll record the event, so no worries if you cannot attend live.

Quick Market Update

Our major indices are lower today as the Dow Jones drops for the 9th consecutive session. The last time that happened was in 1978. The media is making a big deal of it, but at the end of October, the Dow Jones dropped during 8 of 9 sessions - just before it stormed to its first-ever close above 45000 5 weeks later. The weekly and monthly charts on the Dow Jones look WAAAAAY better than they did before the 2022 cyclical bear market AND our other major indices all remain above rising 20-week EMAs.

As I've been stating, money is rotating towards aggressive areas of the market. That suggests anything BUT a worried Wall Street.

Consumer stocks are again leading the charge, this time with discretionary (XLY) and staples (XLP) gaining 0.27% and losing 0.21%, respectively. The most weakness today is seen in industrials (XLI, -1.04%).

We should all keep in mind that the Federal Reserve is meeting today and tomorrow, before announcing its latest interest rate decision at 2:00pm ET on Wednesday. Consensus estimates are for another 25-basis point cut in the fed funds rate. All eyes will be on the Fed Chief Powell tomorrow afternoon as he discusses potential Fed policy in 2025. While most analysts expect further rate cuts in 2025, the timing and size remains somewhat up in the air and that has market participants a bit nervous. The Volatility Index ($VIX) has jumped from 13.24 (Friday's low) to 15.94 (today's high) in just two trading sessions, and that underscores the increase in nervousness as the Fed policy statement approaches.

Also, let's not forget that December monthly options expire this Friday. There's a lot of net in-the-money call premium at risk, which could entice short-term selling from market makers that could add to the recent market weakness.

I hope to see you at this afternoon's December Max Pain event!

Happy trading!

Tom