The weekly market reports include a market position update, a stock market forecast, and an analysis of capital markets. To access the full report, you must subscribe to Premium Articles, Weekly Premium Articles, or All-in-One.
Included in this report:
- Year-to-date performance
- Weekly summary.
- Update on market positioning.
- Stock market forecast
- Capital markets update.
This report makes a brief reference to the recent failed bid of Nippon Steel to acquire US Steel (X). We focus on the significance of this development and its potential impact on key industries going forward.
1. Year-to-date performance
We use two long-only cross-sectional momentum strategies to generate signals for capital markets and factor ETFs. See Section 3 below for open positions and signal updates.
Year-to-date, the weekly strategies (WeeklyReport) are up 0.9% (equal allocation, no leverage) versus a gain of 1% for the SPY ETF. Gold (GLD) is up 0.6% year-to-date. The US dollar index (UUP) is up 0.5%, and long-duration bonds (TLT) are unchanged. The ensemble’s (WeeklyReport) beta over the last 10 years is 0.28, and correlation with the S&P 500 index is 0.55. The Sharpe ratio is 0.87. See Section 3 for details on market positioning.
2. Weekly Summary (December 30–January 3, 2025)
- Stocks fell in the holiday-shortened week amid increasing economic policy uncertainty. Large-cap stocks (SPY) were down 0.5%.
- Gold (GLD) gained 0.9% while the US dollar index (UUP) gained 1.1%.
- Long-duration bonds saw small gains. The TLT ETF ended the week up 0.2%, and year-to-date it was unchanged.
- Commodities (DBC) gained 1.9%, mainly due to gains in energy and precious metals.
- Since January 3, 2022, bonds (TLT) have been down 35.1%, while gold and large caps (SPY) have gained 42.4% and 30.2%, respectively.
- During the week, the equally weighted Magnificent Seven stocks index fell 0.8%. Nvidia (NVDA) gained 5.4%, while Tesla (TSLA) and Apple (AAPL) fell 4.9% and 4.8%, respectively.
- The performance of the market sectors was mixed on the week. Energy (XLE) gained 3.4%, while materials (XLB) fell 2.1%.
Sector ETF performance
Energy (XLE) and utilities (XLU) gained 3.4% and 1.3%, respectively. Materials (XLB) experienced a 2.1% decline and has been in an oversold state for the past 14 days.
The XLB ETF has never experienced an oversold period of 14 days since its inception. Furthermore, since 1990, the S&P Materials total return index has not experienced an oversold period of 14 days.
A rebound in XLB should occur soon, but extended oversold conditions rarely signal a bottom with high statistical significance. These are mostly short-term signals.
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Specific disclaimer: This report includes charts that may reference price levels. If market conditions change the price levels or any analysis based on them, we may not update the charts. All charts in this report are for informational purposes only. See the disclaimer for more information.
Disclaimer: The Weekly Market Reports are provided for informational purposes only and do not constitute investment advice or actionable content. We do not warrant the accuracy, completeness, fitness, or timeliness for any particular purposes of the Weekly Market Reports. Under no circumstances should the Weekly Market Reports be treated as financial advice. The author of this website is not a registered financial adviser. Before subscribing, please read our Disclaimer and Terms and Conditions.
Charting and backtesting program: Amibroker. Data provider: Norgate Data
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