The Next Stock Market Move Will Be a Run for the Record

The Market Gets Very Excited as It Nears Record Territory

As we have told our clients, after the November rally, the next big market move will be a run for the record. That was set in January of 2022 when the S&P 500 hit 4819. We are at 4707 now (as of the close on December 13) – not that far away from the all-time high.

As we get closer to the record, excitement will build. The final run may not happen until January or February, but it is coming soon enough.

Inflation is heading down and concern about the Fed raising rates is almost gone, as it should be, especially after today’s Fed meeting. Interest rates are everything. If we didn’t have the rate increases of 2022 and 2023, we would not have had a down market.

The Fed Has Done Its Part by Announcing Rate Increases Have Stopped and Congress Will Do Its Part by Providing More Massive Economic Stimulus

Congress is doing its part by juicing the economy with massive borrowing and debt-backed spending. It’s hard to get a specific projection for the 2024 deficit – I don’t think anyone wants to focus on it. My own guess is that it will move from $2 trillion last year to $2.3 trillion this year, partly because of another big increase in interest payments due to higher rates.

It could even be higher than $2.3 trillion. Either way, that’s an enormous amount of economic stimulus on the level of the Covid Crisis stimulus earlier. But this time, the economy is wide open so the massive stimulus will go even farther than it did during the pandemic lockdown period.

What Happens After We Hit the Record?

After we hit the record, I suspect that market enthusiasm will drive it up even higher. Once stocks have recovered all their losses, it will feel even safer to invest in stocks. And who wants to miss out on a continuing rally?

How much will the market rise beyond the current record? A few percent for sure. After that, there will be a pause and a pullback, and then continued market growth as we would have seen had the Fed not raised rates earlier.

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