Mosaic Chart Alerts

Seasonality and breadth point to a strong finish.

In this post, I’ll focus on setups that I’m monitoring for both long and short positions. With a chart and short write-up, this is a quick way to scan and plan potential trades.

These ideas are the end result of my process to identify stocks offering the right combination of growth fundamentals along with a proper chart setup.

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I believe the next major bull market phase is underway. Our open positions include high growth stocks, a play on Bitcoin, and other cyclical sectors already breaking out.

Come and join us at the Hub as we ride the bull trend!

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Stock Market Update

Minutes released this week from the Federal Reserve’s November meeting revealed uncertainty over the neutral interest rate that balances a healthy economy with price stability. But after this week’s round of inflation data, monetary officials might grow more concerned over how much further the Fed can cut rates. The personal consumption expenditures price index (PCE) increased by 2.3% in October compared to last year. The core measure gained by 2.8%, with the chart below showing annual core PCE and annualized rates over shorter timeframes. Both the core and headline figure accelerated from September’s pace, and remain above the Fed’s 2% inflation target. It also marks the first time since February 2022 that core PCE, CPI, and PPI are accelerating at the same time.

Chart from Nick Timiraos on X

Despite developments on the inflation front, market-implied odds are confident in another rate cut at the Fed’s December meeting. There’s currently a 70% chance that the Fed will reduce rates by another 0.25% in its final meeting of the year. That’s actually an increase compared to where odds stood before PCE was released. While investors ponder the interest rate outlook as inflation reaccelerates, stocks can keep grinding higher as long as the economic and corporate earnings outlook stays intact.

Investors also have positive seasonality on their side. In last week’s report, I shared how the period stretching from Thanksgiving week through the Santa Claus rally is historically strong for both large- and small-cap stocks. The table below also shows calendar month seasonality for the S&P 500 going back to 1950. December averages a 1.5% gain historically and also has the highest win rate of any month.

Chart from Ryan Detrick on X

At the same time, I shared a positive breadth divergence developing with Hub members in this week’s Mosaic Vision Market Update. Recently, the average stock is leading the S&P 500 “point-to-point”, which is another factor that can set up a strong finish to the year. Keep reading below to see our model portfolio of open positions and chart analysis for new trade ideas.