More Room For Equities To Run In 2024?

Markets finished the year with another consecutive weekly win.

Equities have moved higher for 9 consecutive weeks, which is the longest win streak since October of 2017. Despite the record run, there are still doubters that think we are not in a new bull market phase. If we look beyond the U.S., 21 of the 24 developed nations in the MSCI saw their stock exchanges move higher in 2023, with 14 of those markets higher by double-digits. Monthly flows to the S&P 500 ETF in December were the highest since the ETF was launched in 1993.

While there are certainly some headwinds going into 2024, there are fundamental and technical reasons that point to a 2nd possible strong year for equities.

On the fundamental front, we’re not seeing some of the excesses we witnessed in 2000 or 2007 prior to those recessions. Corporate free cash flow is above trend, unlike in ‘00 & ‘07. Margin Debt, borrowed capital used by investors to purchase investments, is well below the long-term trend, unlike in ‘00 & ‘07. On the technical side, when November & December are up more than 10%, the market is higher the following year 100% of the time. When the S&P 500 has gone more than a year without making an all-time high, markets were higher a year later 92% of the time.

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Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

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