Wide-spread follow-through buying did take place, unlike the prior week, as investors interpreted new economic data favorably.

Driving this enthusiasm was a CPI report showing inflation in check at a slight decline from prior measurements – although the decline was solely the result of lower gasoline prices and supposedly declining health insurance costs (really??). This reeks of another attempt by this administration to paint a rosier picture of the economy than actual (ignoring rising credit card debt, rising auto loan defaults, student loan payments burden, declining commercial real estate conditions and stagnant wages).

Nevertheless, investors reacted to this report as evidence the Fed no longer needs to raise interest rates. Also, some other reports of steady retail sales, housing starts and employment numbers had investors assuming a “soft landing” scenario for the U.S. economy rather than big impending recession.

Rightly or wrongly, investors were avid buyers, and enthusiasm was widespread. Most stocks, including ours, were risers. Our short gains declined, while most of our long positions were gainers or at least our losses grew smaller. Again, a week of many short-to-long reversal signals.

End-of-year stock market activity historically favors a rally, so that too may be a reason more investors are now returning. It has been such an unpredictable and frustrating year, though, that anything is possible as we move past this abbreviated Thanksgiving week into the final month of 2024. A sustained rally this coming week would be a favorable sign.


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