Stock Market Outlook for January 3, 2025
While stocks are having difficulty mitigating the dollar headwind, Gold is not, a normal phenomenon for the first couple of months of the year.
*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.
Stocks Entering Period of Seasonal Strength Today:
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Ellington Financial Inc. (NYSE:EFC) Seasonal Chart
Qurate Retail Group, Inc. (NASD:QRTEB) Seasonal Chart
Riley Exploration Permian, Inc. (AMEX:REPX) Seasonal Chart
Electrovaya Inc. (NASD:ELVA) Seasonal Chart
The Markets
End-of-year weakness is spilling into the start of the new year as the ongoing appreciation of the US Dollar imposes a headwind against equity valuations. The S&P 500 Index ended lower by 0.22% in the first session of 2025, hovering just below the 50-day moving average (5942). The benchmark remains above the previous level of horizontal support at the open gap charted following the US Election at 5850. While we continue to rely on this point as the propping level for the strength that is normal during this holiday period, there is still much to be contemplated pertaining to the near-term trend given the sharply negative candlesticks charted during the last two hours of trade a couple of weeks ago following the FOMC announcement. If you recall, it is within the one-day range of that volatile Wednesday session that we have expected the Santa Claus rally period to trade within and this is certainly proving to be the case. Zooming out, a head-and-shoulders topping pattern can be picked out based on the declines produced over the past five sessions, but, given the low volume environment that we are within during this holiday timeframe, the significance of this topping setup is certainly diminished. The bearish pattern proposes a downside target of 5670, which was the level of resistance from this summer’s high. Neckline support at 5850 would have to be definitively broken, first, to achieve the downside potential that the pattern suggests. More important is the resistance that is being derived at the 20-day moving average, sufficient to raise concern. Should major moving averages increasingly derive points of resistance, reason to conclude the shift of trend would be provided. Our list of candidates in the market to Accumulate and to Avoid remains appropriately positioned at this seasonally strong time of year, but our Avoid list has been growing in recent weeks given the fading of the election euphoria in the market.
Today, in our Market Outlook to subscribers, we discuss the following:
- US Dollar imposing the normal burden on the equity market at the start of the year
- Post-election year tendency for the dollar and the upside target that the technicals suggest of the currency benchmark
- Precious metal and energy commodity prices bucking the dollar headwind
- Energy sector stocks at this seasonally strong time of year
- Weekly jobless claims and the health of the labor market
- US Construction Spending
- Construction stocks and the seasonal trade in the industry
- Investor sentiment
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Sentiment on Thursday, as gauged by the put-call ratio, ended bearish at 1.05.
Seasonal charts of companies reporting earnings today:
- No significant earnings scheduled for today.
S&P 500 Index
TSE Composite
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