Date: January 2, 2024

2024 Begins on Defense – Buy Weakness – Enough Said

Welcome to 2024! I hope you had a great long weekend. Mine was full of football, family, friends along with some yard work, the UCONN game and some office time. For the bourbon aficionados out there, I won an auction of various labels from the Buffalo Trace family that included three bottles of Wellers. Still no Pappy Van Winkle, but I won’t give up hope.

For me this is traditionally the busiest week of the year inside the busiest month of the year. I hope to keep up with blog postings, but that may be difficult as we reconcile December, Q4 and 2023 performance, prepare for our quarterly webinar on Sunday, finish my 2024 Fearless Forecast, start my Q4 report to clients and spend some time with the kids before they go back to school.

2023 ended with a down day, much like the studies suggested. Do not be surprised if we see a large down day or two over the coming week as a good number of folks lock in some huge profits from 2023. Of course, the media will blame it on something geopolitical. Any and all weakness remains a buying opportunity. However, I would not get comfortable like I urged last year. I do not see a repeat.

The Dow Industrials and NASDAQ 100 are basically at all-time highs. The S&P 500 is but one good day away and I expect to see that shortly. The S&P 400 and Russell 2000 need a lot more work. Throughout 2023, I heard so many bears quote how far the various indices were all-time highs. That was a rallying cry. “BUT BUT BUT, the NASDAQ is still 15% from new highs”. One by one the indices have steamrolled the bears. Now they hang their hopes on the mid and small caps. I am sure the spin will be that these indices represent the “real” market.

A number of positive seasonal trends that we have happily ridden over the past days, weeks and months begins to run out this week. The Santa Claus Rally ends on Wednesday at the close. 4747 is the number to best.

I normally have a super strong trend which looks to buy the weakest index at year-end. This year, the year-end rally was so small and tight that I can’t put a lot of emphasis on something I wait for all year. For what it’s worth, the S&P 400 is supposed to lead the next 5 days.

The first trading day of January is a seasonally strong day. That doesn’t appear to be the case today. However, January is usually an up month by more than 1% when starting in an uptrend like now. Did I mention that weakness should be bought?

On Friday we bought more FUTY and more DXHYX. We sold ERX and some levered NDX and some levered Russel 2000.


Paul Schatz, President, Heritage Capital