Equity markets advanced the week of Thanksgiving as investors gave thanks for slowing inflation. Although still hot, inflation has cooled to the point that the FOMC is expected to start cutting rates in the first half of 2024. The coming week's PCE Price Index may confirm the trend and, if so, spur the market to new highs. The risk for traders and investors is that the market will top out soon due to the declining estimates for Q4 earnings.

The Q3 earnings season was better than the consensus estimate at the start of the reporting season, which aligns with the trend. The consensus for Q4 imploded during the cycle, which also aligns with trends and suggests a weak holiday quarter and earnings weakness in Q1 of 2024. In this scenario, a persistently declining outlook for earnings will weigh on the market as the quarters progress and keep the market range bound regardless of the FOMC's next move.