[Market Outlook] Mixed Signs Yet New Highs.

Looking At Historical Similarities, The Market in 2024 Might Do_____? [Company Logo] Mixed Signs Yet New Highs. Looking At Historical Similarities, The Market in 2024 Might Do_____? By Donn Goodman January 21, 2024 [image] Hello Market Outlook readers. MarketGauge team members are spread throughout the US (from New Mexico to New Jersey, Florida to Ohio and Minneapolis) and I think it is safe to say that we are all enduring the bitter cold. We hope you are comfortable and staying warm. I can tell you personally we have received over a foot of snow in the past 48 hours where I live (Cleveland, Ohio). Thank you for tuning in to the Weekend Market Outlook. After a slow start to 2024, the Dow is now up 0.46%, the S&P 500 is up 1.47%, and the Nasdaq is up 2.0%. After a spectacular 2023 with the S&P up 24% and the Nasdaq’s 43% gain, it was inevitable that there would be some profit-taking early on. Is the profit taking over, and will we have another good year in 2024? We explore this question in this week’s Market Outlook. It is important to note that we are in year 4 of the Presidential cycle. Last year, we continually commented on this important cycle and its reliable historical indicator. This 4th year (election year) is the second-best year of all four years, second only to year 3 (last year), which is the best year of the four-year cycle. It's Official! The S&P 500 printed its first all-time high in two years on Friday. It took 511 trading days, and the S&P 500 fell as much as -25% during that time. It was the longest drawdown since the Great Financial Crisis and the 6th longest since 1950. It’s often said that trends correct through either time (511 days) or price (-25%), but this time, it was both. Thus, it emerges from a two-year base that took the price nowhere (if you owned the cap-weighted index), but now the bulls must defend the prior highs at 4800 to avoid a failed breakout. See illustrations of the S&P 500 below: [image] And what exactly did the financial condition look like back in early 2022 when the S&P 500 last hit a new high? See the chart with some comparisons below: [image] The S&P 500 index was not the only market that saw new highs. See additional market charts below: [image] [image] Why should we care about new highs in these markets (and many stocks within each market)? Once price enters uncharted territory, there’s virtually no price memory or overhead supply to prevent it from trending higher. It is why most analysts believe that when markets (or stocks) hit new highs, they have a propensity to move higher. Momentum typically yields more upside, especially if the market or stock is in new territory. Looking back in history, there have been 11 similar instances of new all-time highs following bear markets, defined by prior declines of at least -20%. The table below provides a comprehensive overview of the expected return profiles associated with this study, done by Nautilus Research. It is important to note that while continued upward momentum is typically observed, returns in the 1-week to 2-month range can be mixed. In the case of 2007, it essentially marked a ‘double top,’ but in the other 10 instances, strong returns were witnessed from 5 months up to 1 year forward. [image] Last week we provided three different scenarios that could play out in the economy this year and the potential impact these scenarios could have on the stock markets. If you haven’t read last week’s Market Outlook and would like to review those three scenarios, [please click here](). Broadening Out. Even though the S&P 500 has demonstrated over the past few months that it is broadening out, the discrepancy between the cap weighted S&P 500 index and the equal weighted S&P 500 index (RSP) is big. See chart showing the difference below: [image] This continues to prove that significant inflows have been going into the index fund (SPY) and last year’s leaders. Therefore, capital continues to flow into the Magnificent 7 stocks which currently comprise 30% or more of the S&P 500 index. One stock, Nvdia (NVDA) is already up over 20% for 2024. See chart below: [image] A positive technical indication for the markets. Use the links below to read more about: - A positive technical indicator - Money in rotation - Markets that are very correlated - The complete BigView bullets - Keith’s Weekly Market Analysis video - [Click here to continue as a free member](=) [Click here to continue as a PREMIUM member]( Best wishes for your trading, Donn Goodman CMO Market Gauge Asset Management [image] Every week we review the big picture of the market's technical condition as seen through the lens of our Big View data charts. The bullets provide a quick summary organized by conditions we see as being risk-on, risk-off, or neutral. The the video analysis dives deeper. Get started here and continue with the links below. Risk-On - [Grandpa Russell](=) (IWM) found support at the 50 DMA and bounced (+) - New all-time highs set in [SPY, DIA, and QQQ]() on Friday, which, of course is bullish (+) - [Volume patterns]() improved across the board and were positive. (+) - Spec sector [semiconductors]() led the market higher up almost 8% on the week (+) - [Stocks are over key moving averages]() and bounced from oversold levels on a short-term basis (real motion) and IWM bounced off critical 50% levels in the longer-term averages (+) - Rates rose with TLT closing [under its 50-DMA]() while stocks largely ignored the changes. (+) - Growth stocks hit [new all-time highs](), way outperforming value. (+) There's more... Use the links below to read more about: - A positive technical indicator - Money in rotation - Markets that are very correlated - The complete BigView bullets - Keith’s Weekly Market Analysis video - [Click here to continue to the FREE analysis and video.]()[Click here to continue to the PREMIUM analysis and video](. Best wishes for your trading, Keith Schneider CEO MarketGauge P.S. When you’re ready, here are 4 free ways we can help you reach your trading goals… - [Book a call with our Chief Strategy Consultant](), Rob Quinn. He can quickly guide you to the resources that you'd like best. - To discuss having assets managed by MarketGauge strategies, contact Ben Scheibe, at MarketGauge Asset Management at Benny@mgamllc.com - Get the foundational building blocks of many of our strategies from Mish's book, [Plant Your Money Tree: A Guide to Building Your Wealth](=), and accompanying bonus training. - [Review quick descriptions]( of our indicators, strategies, services and trading systems here. [image] Get more - follow us here... Twitter [@marketgauge]( and [@marketminute]( and [Facebook]() To stop receiving this go [here.]() Got Questions?Office hours 9-5 ET (New York time) Email: info@marketgauge.com Live Chat: Go to bottom right corner of our [home page.]() Call: 888-241-3060 or 973-729-0485 There is substantial risk of loss associated with trading any securities including and not limited to stocks, ETFs, futures, and options. Only risk capital should be used to trade. Trading securities is not suitable for everyone. No representation is being made that the use of this strategy or any system or trading methodology will generate profits. Past performance is not necessarily indicative of future results. To unsubscribe or customize your email settings, [click here](=). "Market Intelligence at a Glance + Tools For Serious Traders" [Unsubscribe]( MarketGauge.com 70 Sparta Ave, Suite 203 Sparta, New Jersey 07871 United States (888) 241-3060