The relationship between the copper price and the S&P 500 Index is one of generally positive correlation, with divergent movements at times. The copper price is an economic bellwether due to its extensive industrial usage; the S&P represents general equity market sentiment. In the days of inflation driven AI craze the price of copper keeps declining.
Over the recent 21 years March has been a decent performing month for the market. Average gains over the period range from a low of 0.78% by DJIA to a respectable 1.40% by NASDAQ.
March typically opens positively but selling pressure and weakness tend to follow quickly thereafter with choppy trading until around mid-month. From here on the market generally rallied to finish out the month. End-of-Q1 portfolio adjustments have contributed to additional choppy trading during the last three or four trading days of March. Election year average performance is influenced by across-the-board double-digit losses in 2020, but March’s pattern is similar with weakness in the first half and modestly improved trading in the second half.
Beware of the Ides of March: This year also coincides with the seasonal decline during presidential election years where the sitting president is running. Support levels to watch in the S&P 500: 4800 old ATH and 4600 near summer 2023 highs.
February’s last trading day historically bearish. DJIA and S&P 500 have been down 9 straight and 11 of the last 12. NASDAQ has tried to buck the trend, up 3 of last 4 years. Potential setup for historically bullish first trading day of March.
The big round number 5,000 is proving to be resistant. It will likely take a few attempts to break through. February’s notorious seasonal weakness is bound to relieve the market’s obviously overbought condition. This is not out of the ordinary for February even into March.
This usually mild retreat (around 4% on average) from mid-February to mid-March in election years with a sitting president running for reelection could be a good opportunity to establish new or add to existing positions. Election year seasonal patterns suggest respectable full-year gains.
Typical February Performance: Weakness After Mid-Month Peak - After a strong opening day, strength has tended to fade until around the seventh trading day. From there until around the 12-trading day all five indexes have historically enjoyed gains. But those gains have not held until the end of February with a peak occurring around mid-month. By the end of February, only NASDAQ and Russell 2000 have remained slightly positive while DJIA, S&P 500, and Russell 1000 turn negative.
The Turn Of the Year (TOY) Barometer is based on the S&P's November 19 to January 19 performance. This is the most predictive period of the year, the single most reliable seasonality barometer of forward stock market returns and the kingpin of seasonal barometers. A return during this 2-month period greater than 3% is a bullish signal, and the market is very likely to do well over the following 12 months. A return of 0-3% is a neutral signal, and results of the current year are expected to be somewhat random. A negative return is a bearish signal for the year, and returns tend to be very poor.
The2024 TOY is +7.22%. Since 1950 if TOY was > 3%, the next year (January 19 - January 19) had an average gain of +16.5% with two single digit losses (32-2), and February - April was 32-5 for an average 3 month gain of 4.23%.
»The lunar node, quite abstractly speaking, is the point of intersection of the solar and the lunar orbits. There are, therefore, two nodes in opposite positions in the heavens: an ascending node or lunar north node, and a descending node - the lunar south node. The solar and the lunar orbits are not, in effect, in the same but in different planes, enclosing a certain angle. Thus there arise the two opposite points of intersection. The peculiarity of these two points of intersection is that they do not stand still but slowly move. The plane of the lunar path rotates in relation to the plane of the solar path; so the two nodes move a round. They move around the Zodiac in a contrary direction to the rotation of the planets, i.e., from Aries backward through Pisces, Aquarius, etc. A complete revolution of a lunar node takes place in 18 years and 7 months; after this time, therefore, the node — the ascending node, for example — is once again in the same position in the Zodiac as it was before. The ascending node is, thereby, the mathematical point that (at any given time and again after 18 years and 7 months [= 6,798.383 CD] the lunar orbit rises above the solar orbit, while at the opposite point the descending node sinks below it.«
Wayne Whaley (Jan 06, 2024) - The S&P broke a 9 week win streak last week. Normally any pullback in a strong advance will scan out as a buy signal. I posted 8 week advances instead of 9, so as to have +10 data points. The TOY Barometer aficionados will argue that the first week of the year is not just any week.
IsabelNet (Jan 06, 2024) - Historically, 9-week win streaks tend to be bullish for US stocks, with a median 12.4% increase in value seen a year later since 1950, giving investors good reason to expect a positive year in 2024.
IsabelNet (Jan 05, 2024) - From January to May of an election year, the performance of the S&P 500 index is often lackluster. However, as the year progresses, the market typically improves and delivers robust performance.
IsabelNet (Jan 05, 2024) - Historically, the average annual return of the S&P 500 index tends to experience a substantial decrease during periods when stocks encounter challenges in the month of January.
The S&P 500 stands as the final major index to surpass its all-time highs. The remaining horizontal line linked to price history is at 4818—the intraday all-time high recorded two years ago on January 4, 2022. Currently, the S&P 500 maintains robust health. In the chart’s lower panel is my preferred gauge of market breadth, Net New Highs. This metric reports the number of stocks reaching new highs versus those making new lows across the NYSE and Nasdaq markets. This measure of breadth has remains consistently positive during the best market rallies.
Given the prevailing positive sentiment across markets, stemming from the widespread advance since November, I speculate the likelihood of a healthy correction as the next probable move. To assess this, I will closely monitor market breadth, utilizing it as a key factor in evaluating the probabilities of whether the anticipated correction is likely to be healthy or potentially more severe.
A mere two
weeks ago, the S&P 500 ETF SPY experienced its largest inflow ever.
This encapsulates the current state of the S&P 500—a market
teetering on the brink of all-time highs, with both retail and
professional market participants joining with unwavering enthusiasm— the
metaphorical “everyone is in the pool” moment.
The leading observation for my initial 2024 thoughts that the market is ripe for a healthy correction is the condition of market sentiment, and equity exposure. For over a month now the CNN Fear & Greed Index has reported a market operating in greed, Extreme Greed for the last two weeks.
The NAAIM Exposure Index measures US equity exposure among active fund
managers reported the highest reading for the year, the highest since
November 2021. (The Nasdaq peaked in November 2021, and the S&P 500
just over a month later in January 2022).
The following chart of the S&P 500 marks the relative peaks
in sentiment and equity exposure using the CNN Fear & Greed Index
(marked by red arrows) and the NAAIM Exposure Index (marked by blue
arrows). It is a clear observation that the combination of excessive
greed and elevated equity exposure have preceded all meaningful declines
since the 2022 peak. I do not think it will be different this time.
To end last week’s note I summarized this chart as presenting a compelling argument for selling into greed— I still feel this way. Momentum
has propelled the market through the year, however this is recently
being subtly being interrupted. In the lower panel of the chart is the
Percentage Price Oscillator. This oscillator offers a quick insight into
trend momentum. The red dots within the panel signify negative
crossover events, a slowdown in momentum.
In
my analysis, momentum interruption occurs when the initial negative
crossover is not succeeded by a corrective price move. Instead, price
continues to climb with successive negative crossovers, creating a
pattern of interruptions. Based on my observations, the decline that follows such an interruption cycle tends to erase most of the earlier advance.
The previous instances of momentum interruptions in August 2021
and July 2022 exhibit an intriguing resemblance to the current
scenario, with the index rallying approximately 5% as momentum
decelerated. In both cases, the subsequent decline erased most of the
earlier advance. A comparable outcome today would potentially bring the index down to 4550. In
my analysis the immediate term has the signals flashing caution towards
a 5% decline. If this scenario unfolds, the speculated decline will
initially be favored as being one of health that sets the index up for
an additional leg higher. I speculate the correction will have the S&P 500 trade between 4500 - 4600 in the near term. Should this unfold, it will initially provide a healthy technical appearance where price revisits the breakout area.
The interest rate changes in the United States trigger international capital movements, which are reflected in the Dow Jones Index, an indicator of such movements. To predict future economic conditions, understanding the trends in U.S. interest rates and the Dow Jones Index can provide insights into both the U.S. and global economies. To
comprehend the economic situation from 2023 to 2024, it's observable
that the patterns of interest rates and Dow Jones Index during 2006-2007
are similar. The period when the U.S. continuously raises interest
rates and then freezes them, leading up to a rate cut, is known as the
'Goldilocks' period, which is typically a phase of a major bull market
in stocks.
To aid your
understanding, I have specified concrete dates.
Think of these as
reference points, focusing on the patterns and the dates surrounding
them.
When
interest rates are frozen consecutively three times (Point (d)), the
market gains confidence that there will be no further rate hikes.
Similar to 2006, when three consecutive rate freezes led to breaking
historical highs, the same pattern was observed on December 13, 2023,
breaking the historical high of January 4, 2022 (Point (f)).
The peak of the U.S. economy is predicted to be on May 8, 2024, with the U.S. stock market artificially creating a peak for about six months (until the first rate cut). The global economy, with the decline of the U.S. dollar, moves towards a strong bull market in individual countries. The magic of exchange rates creates opportunities for profit through currency differences and stock appreciation, leading to a surge in global stock markets. Global and U.S. stock markets are expected to start declining simultaneously around November 15, 2024 (just before the U.S. rate cut). At this point, the U.S. economy would have been declining for about six months from its peak, while the global economy, excluding the U.S., remains stable.
I believe there are signs of a weakening U.S. economy, which will lead to the start of interest rate cuts by the end of 2024. Eventually, about a year later on December 12, 2025, both the U.S. and the world will face an economic crisis. The peak of the U.S. economy is expected in May, while the global economy is predicted to peak in the second quarter of 2025 [...] I hope you too can achieve favorable outcomes during this time.
(1. - 4.) On August 2, 2023, through my posts, I predicted the breaking of the historical high of the Dow Jones Index and the freezing of U.S. interest rates (the Goldilocks period). I forecasted the peak of the stock market, the timing of the economic crisis, and all phases up to the great depression in 2032. By looking at my past Twitter posts, one can see that the results are following the same patterns exactly as predicted. My posts will be helpful to understand these patterns:
The S&P 500's average annual return during Election Years is 11.6%. Since 1833 the fourth year in the Decennial Pattern has been up 13 vs 6 times down with an average annual return of 5.22%. Over the past 30 years,
January gains have occurred 17 times (57%), while losses numbered 13 (43%), barely better than the flip of a coin. In bull markets, New Moons are bottoms, and Full Moons are
tops. In bear markets, New Moons are tops, and Full Moons are bottoms. More often than not,
stocks will rise from around the 7th to around the 14th calendar day of a month, fall
from the 14th to the 20th, and rise from the 20th to the 25th.
In 1967 Yale Hirsch published the first Stock Trader’s Almanac and presented theFour Year Presidential Election Cycle
as an significant and predictive indicator of stock market performance.
The outcomes are relatively steady, regardless of the president’s
political leanings in office at the time, and the year after each
presidential election marks the start of a new four-year stock market
cycle. Considering annual returns of each year in the four year cycle,
the Pre-Election Year (2023) is considered best, and the Election Yearsecond. The most predictive period of the year is November 19th to January 19th. Wayne Whaley coined it a 'Turn of the Year (TOY) Barometer'. If the return of this 2-month period is greater than 3%, a bullish
signal is given, and the market is very likely to do well over the
following 12 months. If the return is 0-3%, the signal is considered neutral; and if the return is negative, the signal is bearish, and returns very poor. Currently the S&P 500 still trades some 6% above the November 19 level.
The 250 year US empire live cycle concluded in 2023. Demise by folly overstretch. Uni-polar global supremacy is over, and Russia, China and Iran stronger than ever. A multi-polar world of worlds now knows how to deal with a paper-tiger gone mad. All star-spangled striped monsters check-mated, defeated and unveiled 24/7 along the many battle fronts on the globe. Project Ukraine lost. Now supervising genocide in Palestine. Yemen's Ansar Allah controls the Bab al-Mandab and launches full front attacks against the hegemon. An emerging Muslim alliance will liberate the Holy Land. Iran may shut down the Gibraltar strait any moment. The Taliban will enter Jerusalem and flatten Tel Aviv. Zionist Saudis and emirs doomed. Revolutionary Shia will root them out. The fever pitch increases. As some discard all this as hysteria and Islamist war propaganda, the dollar hegemony is rapidly melting away under the world island's rising sun. 2024 will be a remarkable 'election year'. W.D. Gann projected 'major panic, breadlines, soup kitchens, despair, and unemployment' into the US of 2024. And US astrologer L. David Linsky sees the home-front ready for more mayhem, upheaval, war and regime change. Plenty of opportunities along the lines and times in the above seasonal roadmap for 2024.
The Kitchin Cycle and the Benner Cycle are bullish for all of 2024 and 2025 (historically the fifth year outperforming all other years in the decennial pattern). In the current decennial cycle Larry Williams identified June 2024 as "the sweet spot with 90% accuracy" to buy stocks until December 2025.