Welcome to this week’s edition of the Weekly Trading Insight! As we navigate through a dynamic market landscape influenced by technological advancements and key economic indicators, our aim is to equip you with the necessary insights to make informed trading decisions. This week, we delve into the latest market data, highlight significant trends, and identify opportunities that lie ahead.
Market Recap
- US 30: Closed at 42,703.00, up +305.3 points or +0.72%
- US 500: Ended at 5,938.90, gaining +69.3 points or +1.18%
- Dow Jones: Finished at 42,732.13, adding +339.86 points or +0.80%
- S&P 500: Closed at 5,942.50, up +73.90 points or +1.26%
- Nasdaq: Surged to 19,621.68, gaining +340.89 points or +1.77%
- S&P 500 VIX: Fell to 16.13, down -1.80 points or -10.04%
- Dollar Index: Declined to 108.80, down -0.410 or -0.38%
Feature Analysis: S&P 500’s Momentum Faces a Potential Cooldown in 2025
Oppenheimer analysts predict the S&P 500 will slow in 2025 after two years of extraordinary gains, aligning with historical trends following strong rallies. When the index gains over 40% across two years, the next year typically sees muted returns averaging 3.7%. Now 27 months into a bull market, the S&P 500 nears the average cycle duration of 32 months, suggesting potential stabilization rather than continued rapid growth. Analysts project a balanced 6% return with a target range of 6,000 to 6,700, highlighting the likelihood of corrections and consolidations over dramatic growth.
Trading Strategies and Ideas
- Dow Jones Industrial Average Index: The Dow Jones Industrial Average ($DJI) is testing key support at the 100-day SMA, a level that previously held during December’s post-FOMC sell-off. A potential positive RSI divergence is emerging, with recent price lows showing a higher RSI reading than earlier in the month. This setup suggests bullish potential if the 100-day SMA holds as support, but the index must prove stability at this level. Near-term technical outlook: bullish if support at the 100-day SMA holds.
- Nasdaq 100 Index: The Nasdaq 100 (NDX) continues its uptrend, supported by a rising 50-day SMA. The index is currently finding support at this level, as seen during prior pullbacks in November and December. While RSI does not signal bullish divergence, the trend remains intact, and Nvidia’s upcoming CES keynote could act as a potential catalyst for tech stocks. Near-term technical outlook: bullish.
Upcoming Economic Events
- Monday (Jan. 6): Factory Orders, ISM Services
- Tuesday (Jan. 7): Trade Balance
- Wednesday (Jan. 8): ADP Employment Change, Consumer Credit, EIA Crude Oil Inventories, MBA Mortgage Applications Index
- Thursday (Jan. 9): Continuing Claims, Initial Claims, Wholesale Inventories
- Friday (Jan. 10): Nonfarm Payrolls, Average Workweek, Average Hourly Earnings, Unemployment Rate, University of Michigan Consumer Sentiment
For detailed insights and more information, visit Reuters and Yahoo Finance.
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Disclaimer
This newsletter is for informational purposes only and does not constitute financial advice. Always do your own research and consider consulting a financial advisor.
