The Standard and Poors 500 index (SPX) closed Friday at 4697, up nine points or 0.2%, but down one percent for the first week of the new year. Trading volume ran at or just below the 50-day moving average (dma) all week. The bullish run from early November hit its high on 12/28 at 4793 and has now declined two percent from that high.

VIX, the volatility index for the S&P 500 options, opened the new year at 13.2% and closed at 13.4% Friday after spiking as high as 14.6% earlier on Friday.
 
I track the Russell 2000 index with the IWM ETF, which closed yesterday at 193, down less than one point on Friday, but down 3.1% for the first week of the new year. IWM hit its high in the most recent bullish move at 205 on 12/27 and is now down nearly six percent from that high. IWM broke support at 196 and closed just above the next support level around 192.

The NASDAQ Composite index closed Friday at 14,524, up 14 points or 0.09%. NASDAQ opened the week at 14,874, setting up a weekly loss of 2.4%. Trading volume ran slightly above the 50 dma all week. NASDAQ closed near support on Friday and the next support level is near the 50 dma at 14,162.

The strong bull market since early November was primarily based on traders’ expectations for the FOMC to lower interest rates in 2024. The so-called dot plots of the committee members that accompanied the Fed announcement in December were forecasting two to three rate cuts in 2024. Since then, the enthusiasm has faded steadily. The release of the minutes from the last FOMC meeting this week threw cold water on any rate cuts early in 2024. Committee discussion was hopeful that further hikes would not be necessary, but several committee members were concerned that the inflation rate may not be fully constrained. That took the steam out of the bulls’ sails and contributed to the bearish trading to start the new year.

The Santa Claus rally, coined by Yale Hirsch in 1972 (founder of the Stock Trader’s Almanac), describes a common bullish trend for the last five trading days in December and the first two trading days in January. The Santa Claus rally took a pass this year, declining 1.1%.

The Stock Trader’s Almanac also follows the First Five Days of January and the January Barometer for the full month of January. All three measures comprise the January Trifecta; when all three are positive, the S&P 500 has been positive for the year over 90% of the time. The Santa Claus rally failed, and the First Five Days is looking like a second failure, with four days done and the market down one percent. The track record of the January Barometer by itself boasts an accuracy of 84%.

Friday’s intraday trading was generally more bearish with highs set early and most of the subsequent trading trending lower. But the market managed a positive finish for the day. I am left with a mixed review for the 2024 market.