Stock Market Outlook for January 8, 2025
If seasonal norms for post-election years hold true, we could be in store for another couple of months of dollar and yield strength, presenting a headwind against equity prices.
*** 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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Broadcom Inc. (NASD:AVGO) Seasonal Chart
Netflix, Inc. (NASD:NFLX) Seasonal Chart
Sandstorm Gold Ltd. (TSE:SSL.TO) Seasonal Chart
Watsco, Inc. (NYSE:WSO) Seasonal Chart
Equity Lifestyle Properties, Inc. (NYSE:ELS) Seasonal Chart
Genie Energy Ltd. (NYSE:GNE) Seasonal Chart
Note to subscribers using Apple email servers (eg. @me.com, @icloud.com, @mac.com): For reasons that are not clear, our daily email distribution for today bounced back and has been deemed undeliverable. The issue affects a very small portion of our subscriber base. If you we unable to receive our report for today, please use the link below to access this Market Outlook available to you.
The Markets
Stocks gave up their technology fuelled gains that were achieved on Monday to trade sharply lower as investors raced to book profits in tech-darling NVIDIA (NVDA) following the unveiling of new chips at the Consumer Electronics Show (CES). The S&P 500 Index ended lower by 1.11% on Tuesday, once again showing failure to overcome resistance at the 20-day moving average (5978). The benchmark is back to interacting with the 50-day moving average (5950) that it has been clinging to in recent days, providing a rather neutral position for the intermediate-term trend. The benchmark remains above the previous level of horizontal support at the open gap charted following the US Election at 5850. A head-and-shoulders topping pattern can continue to be picked out based on the declines produced in recent weeks, but, previously, the low volume environment that the market has been within during the holiday timeframe provided little of significance to this topping setup. Tuesday’s session with money managers back in the driver’s seat certainly provides something to to heighten the caution that the bearish pattern proposes. The setup points to a downside target of 5670, which was the level of resistance from this past summer’s high. Neckline support at 5850 would have to be definitively broken, first, to achieve the downside potential that the pattern suggests. Superseding any patterns that can be picked out is just the mere appearance that resistance, such as around the 20-day moving average, is starting to have a greater influence than support. Reason to conclude the shift of trend is starting to be provided. We continue to scrutinize the potential impact of this evolving shift on our list of candidates in the market to Accumulate and to Avoid, but we would not be surprised to see our list of candidates in the market to Avoid expand following this first full week of the year once start of the year fund inflows are allocated.
Today, in our Market Outlook to subscribers, we discuss the following:
- The push higher in the cost of borrowing
- The attraction of historically yield sensitive segments at the start of the year
- Job Openings and Labor Turnover Survey (JOLTS) and the investment implications within
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Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.78.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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