Showing posts with label S&P 500 Index. Show all posts
Showing posts with label S&P 500 Index. Show all posts

Tuesday, December 24, 2024

2025 US Stock Market Outlook │ Larry Williams

My outlook on the US stock market in 2025 uses the metaphor "Clint Eastwood Market," representing a mix of good, bad, and ugly factors:
  • On the positive side, there are no immediate signs of a US recession, with strong employment figures and a labor market expected to improve in early 2025. Business conditions remain stable, and historically, stock markets tend to perform well in the first year of a presidential term. 
  • However, there are risks, including potential profit-taking after a strong 2024 market, the uncertainty surrounding trade policies and tariffs, and the unpredictable actions of the Fed, Congress, and business leaders like Elon Musk. 
  • On the negative side, market valuations, such as high price-to-earnings and Shiller CAPE ratios, suggest that the market is overvalued, which increases the risk of a correction. Additionally, industrial production is underperforming, which could hinder economic growth, and inflationary pressures from the excessive money supply expansion since the COVID-19 pandemic may contribute to market volatility.
 
Very Long-Term Market Wave in the DJIA and US-stocks down into 2038.
 
 Shorter Long-Term view on the DJIA with major lows in 2025 and 2028.
 
2025 will be a trading range market with a bullish bias.
 
 Selling pressure in Q1 of 2025. Second half of the year strong. Overall gains.

Given the current very high valuation ratios, the 2025 forecast indicates slower growth and market underperformance compared to historical averages. Therefore I don’t foresee a runaway bull market in US stock indices in 2025, and volatility is likely to be a key characteristic, with short-term rallies and corrections. Very long-term market cycles suggest we are at the beginning of a prolonged period of sideways movement, with the next major bull market not expected to begin until around 2038. 

Regarding a major crash that some are constantly talking about, I don't see it occurring in 2025 either. While the market will be challenging, the overall bias will lean toward the upside.



The S&P has traded above its 200-DMA all year. This has happened 11 other times since 1952, and the next-year move has been about
half the average. Last time this happened was in 2021, and before that, 2017  —
Bespoke, December 24, 2024.

Wednesday, December 4, 2024

December Stock Market Performance in Election Years | Jeff Hirsch

Trading in December is typically holiday-inspired, driven by a buying bias throughout the month. However, the first part of the month tends to be weaker due to tax-loss selling and year-end portfolio restructuring. Over the last 21 years, December’s first trading day has generally been bearish for both the S&P 500 and the Russell 2000. A modest rally through the sixth or seventh trading day often fizzles out as the month progresses. Around mid-month, however, holiday cheer tends to take over, and tax-loss selling pressure fades, pushing the indexes higher with a brief pause near the end of the month. In election years, Decembers follow a similar pattern but with significantly larger historical gains in the second half of the month, particularly for the Russell 2000.


  A choppy first half of December before the year-end Santa Claus rally.
The Santa Claus rally begins on December 24 and lasts until January 3, 2025.
The 'January Effect' small-cap outperformance starts in mid-December.
See also [HERE], [HERE], [HERE], and [HERE].
 
Small caps tend to start outperforming large caps around the middle of the month, driven by the early January Effect. Our Free Lunch” strategy is based on stocks making new 52-week lows on Quad-Witching Friday (December 20). The Santa Claus Rally (SCR) begins with the market open on December 24 and lasts until the second trading day of the new year. Since 1969, the average S&P 500 gain during this seven-trading-day period has been a respectable 1.3%.

This serves as our first market indicator for the New Year. Years when the SCR fails to materialize are often followed by flat or down markets. Of the last seven instances where our SCR (the last five trading days of the year and the first two trading days of the new year) did not occur, six were followed by flat years (1994, 2004, and 2015), two by severe bear markets (2000 and 2008), and one by a mild bear market that ended in February 2016. The absence of Santa this year was likely due to temporary inflation and interest rate concerns that quickly dissipated. As Yale Hirsch’s now-famous line states, If Santa Claus should fail to call, bears may come to Broad and Wall.

 

Consumers have never been more interested in buying stocks. Corporate insiders have never been less interested. 
Pick your fighter. — Jason Goepfert, December 4, 2024.

Wednesday, November 6, 2024

Presidential Election Day to Yearend Historically Bullish │ Jeff Hirsch

With a clear winner decided, the history of market gains from Presidential Election Day to year-end is encouraging. As shown in the tables above and below, the market tends to rally from Election Day to year-end, with a few exceptions due to exogenous factors.

 DJIA up 72.2% of the time, with an average gain of 2.38%.
S&P 500 up 66.7% of the time, with an average gain of 2.03%.
NASDAQ up 76.9% of the time, with an average gain of 1.50%.
Russell 2000 up 61.5% of the time, with an average gain of 4.93%.

Profit-taking at the end of 1984 kept stocks flat after the rally from the July bear market bottom, driven by anticipation of Reagan’s landslide reelection victory. The infamous undecided election roiled stocks at the end of 2000 amid the dot-com bear market of 2000-2001. The Great Financial Crisis and the 2007-2009 generational bear market caused a further plunge in late 2008, fueled by shrinking economic data and uncertainty surrounding a change in party and the incoming, unknown Obama administration. The escalating European Debt Crisis kept the stock market on edge in late 2012.


Overall, from Election Day to year-end, the DJIA is up 72.2% of the time, with an average gain of 2.38%. The S&P 500 is up 66.7% of the time, with an average gain of 2.03%. The NASDAQ is up 76.9% of the time, with an average gain of 1.50%, and the Russell 2000 is up 61.5% of the time, with an average gain of 4.93%.

Tuesday, November 5, 2024

Bullish Novembers in Election Years Have Weak Seasonal Points │ Jeff Hirsch


The first 5-6 trading days are typically bullish, followed by weakness in the week before Thanksgiving. The DJIA and S&P 500 strength has shifted to mirror the NASDAQ and Russell 2000, with the most bullish days occurring at the beginning and end of the month.
 
 
 November Performance in “All Years” (1930-2015) and “Election Years” (1932-2012) 
 
November Market Performance (2001-2021) — Jeff Hirsch,  October 20, 2022.
 
 S&P 500 and Nasdaq average performance during the presidential election week.
 
 
S&P 500 Seasonal Pattern for November of the Election Year 2024.
Alternative approach: 4-Year Presidential Cycle in Line with the Decennial Cycle.

Thursday, October 24, 2024

Halloween Trading Strategy Begins Next Week | Jeff Hirsch

Next week provides a special short-term seasonal opportunity, one of the most consistent of the year. The last 4 trading days of October and the first 3 trading days of November have a stellar record the last 30 years. From the tables below:


     S&P 500: Up 25 of last 30 years, average gain 1.96%, median gain 1.61%.
     NASDAQ: Up 25 of last 30 years, average gain 2.43%, median gain 2.29%.
     DJIA: Up 24 of last 30 years, average gain 1.95%, median gain 1.39%.
     Russell 2000: Up 23 of last 30 years, average gain 2.34%, median gain 2.56%.

Many refer to our "Best Six Months Tactical Seasonal Switching Strategy" as the "Halloween Indicator" or "Halloween Strategy" and of course “Sell in May”. These catch phrases highlight our discovery that was first published in 1986 in the 1987 Stock Trader’s Almanac that most of the market’s gains have been made from October 31 to April 30, while the market, on average, tends to go sideways to down from May through October.


Since issuing our Seasonal MACD Buy signal for DJIA, S&P 500, NASDAQ, and Russell 2000, on October 11, 2024, we have been moving into new long trades targeting seasonal strength in various sectors of the market via ETFs and a basket of new stock ideas. The above 7-day span is one specific period of strength during the “Best Months.” Plenty of time remains to take advantage of seasonal strength.

 
 Election-Year Octoberphobia — Jeff Hirsch, October 9, 2024
 
 November Performance in “All Years” (1930-2015) and “Election Years” (1932-2012) 

 
October 28th has, on average since 1950, been the strongest day of the year.
 
 
 
S&P 500 Seasonal Pattern for Q4 of the Election Year 2024
- Presidential Cycle in line with the Decennial Cycle.
 
 S&P 500 E-mini Futures (daily bars) and current 21-Trading Day Cycle ( ± 3 TD).
 
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Goldman Sachs' technical strategist Scott Rubner indicates that US stocks are entering a favorable trading environment due to capital flow trends. He expects the quiet period for stock repurchases to end on October 25, with listed companies likely to engage in significant buybacks in November and December, estimated at $6 billion per day, accounting for 21.1% of annual buybacks.


As mutual funds, the largest sellers of US stocks, begin to withdraw before Halloween, this may positively impact stock prices. October marks the end of the fiscal year for most mutual funds, potentially leading to sell-offs of underperforming assets for tax reasons. Rubner noted that all 756 mutual funds, valued at $1.853 trillion, end their fiscal year on October 31, 2024. Historically, American households increase stock purchases in November, with capital inflows into mutual funds and ETFs peaking during this month.

 In Q4 2024, the NASDAQ may gain more than double what the S&P gains.

Looking ahead to the US election, Rubner suggests that post-election, market volatility may reset, benefiting various trading strategies. Additionally, strong non-farm payroll growth and shifting inflation expectations are becoming critical market factors, particularly regarding a potential Trump election victory, which may reignite trading interest.

 

Tuesday, October 1, 2024

October Volatility After Big Gain First Three Quarters | Jeff Hirsch

The history of years with gains of this magnitude at this juncture in the year with solid Q3 and September upside performance for the most part have been followed by more bullish market behavior and a continuation of the rally. But as you can see in the table of S&P 500 Performance Following Big Q3 Year-to-Date Gains the bulk of any damage occurred in October.


Of the top 30 S&P 500 9-month gains since 1930 all 30 years ended higher with average gains of 25.9%. Q4s were up 24, down 6, average gain 4.6%. Octobers were up 15, down 15 with an average gain of 0.01%. Of the most recent 12 occurrences October is down 7, up 5 with an average loss of -1.1%, which includes the Crash of 1987 and a -21.8% loss for October 1987.

Quoted from: 

Thursday, September 19, 2024

S&P 500 Projection Chart from 2009 to 2025 | Jeff Hirsch

We are revising our 15-Year Projection chart. This was first drawn in 2011 when our book Super Boom: Why the Dow Jones Will Hit 38,820 and How You Can Profit From It (Wiley) hit the stores. The projection was based upon, drawn from, years of historical patterns and data. In the years to follow numerous unprecedented events occurred, the Fed held its key lending rate in a range of 0 to 0.25% for an incredible seven years, under took multiple rounds of quantitative easing (QE) and essentially pledged unwavering support for the market. Many other nations and central banks around the world were taking similar or even more aggressive steps to support their own economies and markets. Negative interest rates and negative yields on 10-year bonds are not what we consider normal.
 
 
 
Our current updated projection is illustrated in the red line in the chart. In keeping with the history of market performance in pre-election years and the current trajectory of the indices, it would not surprise us for the market to continue rising through April make new high here in Q2, then pause over the weaker summer months before hitting higher highs toward yearend. Next year promises to be an embattled election year and the likelihood of another significant correction or even a bear market are higher.