Date: January 8, 2024

Strong Q4 > Weakness in January, But How Much?

Thank you to those who attended our quarterly webinar last night. We covered a lot and I appreciate your time. The archive will be available today and emailed to all those who signed up.

My 2024 Fearless Forecast turned out to be a whole lot longer than I anticipated. I know. I know. You’re really shocked. So, I decided to release the equity market portion first and then the rest. If all goes according to plan, you can expect that email on Monday night.

Friday’s employment report continued to confirm an annoying trend. The headline number comes in stronger than expected, but the subsequent revisions end up chopping much from that good number. On Friday, it was strong and it was weak. Stocks sold off and rallied and sold off. Overall, it was a feeble bounce after four straight down days.

Coming into the new week, I fully expect the bulls to put up a stand. What I can’t say yet is the magnitude of the expected bounce. Could it go back to the old highs? Sure. Could it stop around 4750? Sure. I would be surprised if we didn’t get any bounce at all. That would be telling and indicate that the 4600 area, plus or minus, is likely next.

I keep waiting for the pundits to invoke January 2022 as the analog the market is following. Recall that stocks peaked right as the year started and sold off sharply in January, February and March. I do not see that repeat at all.

January 2020 has some similarities. Huge rally from 2019 into mid-January 2020 followed by a 3% decline. That seems similar.

Early 2018 also has some correlation. Strong rally from 2017 with giddy and greedy sentiment followed by a big 13% hit. The magnitude got me. I didn’t see it coming.

Let’s end with 2004 which is also a presidential election year with an incumbent running. 2003 was a huge up year.

Some larger declines, some smaller declines. I remain in the smaller decline camp, for now.

On Friday we bought BIPIX and BASE. We sold some FNCL.


Paul Schatz, President, Heritage Capital