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O ur playbook for Trump win consistently been:

• small caps IWM0.32%
• financials and industrials KRE-0.48%  XLF0.58%  XLI1.03%
• bitcoin BTC SMLR-16.52%  MSTR-2.08%

Today’s open validates these views. Stick with them. Add if you have not added exposure.

Fed cut of 50bp is good. Stocks have tailwinds for 1M and 3M forward. As we noted:

• 7 of 7 times when Fed cuts and no recession (like today)
• stocks higher 1M and 3M later

Stick with most sensitive to falling interest rates: IWM0.32%  XLF0.58%  KRE-0.48%

American WTI Crude stockpiles rose by 3.7mm barrels last week, contrary to industry expectations of a draw. This supply combined with OPEC+ leaning towards increasing production in the months ahead is a bit of a concern on the Supply/Demand picture for Crude. The International Energy Agency (IEA) warned of a major surplus this decade as the world transitions away from Fossil fuels. While it's hard to say what the timetable of this will be, given that 2024 is an Election year, it would make sense that US production remains high to get Crude prices and Inflation lower ahead of the election (See today's PPI data which showed Energy as a particularly big reason for the miss) This current backwardation structure in WTI Crude (1 year WTI Futures curve shown in blue) should eventually start to lead to a bearish contango structure as front month starts to dip. XLE0.37%  is now the weakest of the 11 sectors, performance wise over the last month, down by -4.59%, more than double the negative performance of the next worst sector, Financials which is -2.44% (XLF0.58% ) in rolling 1 month returns.

Financials are in focus technically after forming a tight ascending triangle pattern that likely should be resolved by an upside breakout. Thus, while markets might seem stretched to many investors, one of the key representative parts of '"the market" is Financials, the 3rd largest part of ^SPX0.45%  at around 12.5%. (XLF0.58% ) A breakout in Financials will let this move extend even longer. My UPTICKS stocks which i technically prefer are AXP1.09%  (just breaking out today back to new all-time highs above 2/8/24 intra-day peaks) and BRK.B, although this latter stock is growing stretched. Additional technically attractive stocks within the Financials space include V, and MA, along with the exchanges (CME and ICE, this latter could possibly hit new all-time highs by tomorrow's close over 139.79 which could help this accelerate) Overall, Financials are a technical overweight, despite some of the regional banks being under pressure and selectivity remains key. Other names of interest technically: KKR, BX, BRO, PGR- Chart of Invesco's Equal-weighted Financials ETF shown (RSPF0.21% )

Today's PPI was "hot" and yet stocks are not really selling off

• this is a sign stocks have more upside near-term
• as highlighted multiple times this week, we are watching margin debt
• still too low and until it is higher, we think stocks have upside

The near term top will be a moment when we get "good news but stocks fail to rally." That is not today. In fact, today is the opposite. Bad news and stocks are holding in there. Stick with --> IWM0.32%  XLF0.58%  XLI1.03%  XLK0.18%  QQQ0.10%  and Bitcoin BTC and miners

The choppy equity performance of first two weeks Jan tells us we are in a “difficult” period and probably like this most of first half

• but as we noted in our latest note and video
• we see new highs in Jan because this is what happens when we get within 1% of all time highs
• but new highs doesn’t mean “easy sailing”

So be wary. For the full year, our top ideas:

• small capsIWM0.32%
• financialsXLF0.58% KRE-0.48%
• industrialsXLI1.03%
• technologyXLK0.18% QQQ0.10% HACK-0.27% PANW-0.20%
• even miners/bitcoinBITB-1.71% MARA0.51% RIOT-1.37%

Just a heads up, my final 2023 CNBC appearance is today at 10am ET. You all have my video from yesterday and that is what will be discussed IWM0.32% KRE-0.48% XLF0.58% QQQ0.10%

U Mich inflation Dec final expectations released.

• Inline with consensus and that is ok
• 1-yr still 3.1%. Great figure actually
• Still sustains case for YE rally

We favor small-capsIWM0.32%  FAANGQQQ0.10%  and financialsKRE-0.48% XLF0.58%

We still see high probabilities of a rally into YE, favoring small-caps and financials and equal-weight S&P 500

• Primary reason is 65% of large-cap fund managers are missing their benchmark = chase stocks
• Fund managers buy "beaten down" and "shorted names" = HF short covering
• HF single stock shorts among highest levels of past 5 years
• "beaten down" stocks rallying triggers CTA buying of these names/indices = momentum
• Plus: retail investors are finally putting money into the equity market

See the potential?IWM0.32% KRE-0.48% XLF0.58% RSP0.39%

Today is an example of a “no entry” market

• the pullback is shallow, so investors cannot “buy the dip”
• shows how offside investors were going into Fed meeting
• meaning many expected a selloff

Suggests to me the parabolic rise has legs into YE We stick with small-caps, banks and faang (less so actually) IWM0.32% KRE-0.48% XLF0.58%