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Corrective trend extension pattern? End of impulse patternHello there, I hope you're having a great start to the new year. I wish you all the best in your trading ventures and a happy new year with your loved ones. I'm a fan of the Elliott wave principle, which I find interesting and useful for market analysis. I've developed my analytical approach by combining this principle with my personal experience and considering various scenarios that are likely to occur in the market. Although I'm going to share my analysis with you, please note that I won't be providing a buy or sell signal. My goal is to share my unbiased analysis so that you can use it as a guide to make an informed decision. To give you confidence in my analysis, I'll always share my previous analysis from the same market so that you can compare. All the details of my analysis are clearly labeled, making it easy for you to understand. I hope my analysis will be useful to you in your business journey, and I wish you the best. I'm waiting to hear from you. Finally, I'd like to remind you that like-mindedness and support, comments, and likes are the most important pillars of progress, like support points in the financial markets. They give me the energy to continue and share more ideas with you. Sincerely,
SKILLING:SPX500
by mehdi47abbasi79
Is the Santa Claus Rally Getting Snatched?2024 has opened on a sour note. S&P 500 futures are lower by about 0.7%. Not a huge move, but that's good enough to erase nearly all the gains since the close on December 21. Recall that the technical Santa Clause Rally period is the last five trading days of the old year and the first two sessions of the new year. As it stands, the S&P 500 Trust ETF (SPY) is up just fractionally from the final trade on Thursday, December 21 as apparent profit-taking is taking place after a +26% total return year finished up last Friday. Where is support on the chart of the SPX? A 3-year zoom of the index reveals that the August 2022 peak was 4637 and the July 2023 high was 4607. The rising 50-day moving average is all the way down at 4503 as of this morning. You have to go about 10% lower to find the 200-day moving average. For now, the intraday all-time high notched on the second trading day of 2022 appears safe at 4818.62. A modest January pullback to retest the low 4600s seems absolutely doable, particularly considering the bevy of macro data we are about to receive this week, namely the December employment report. Then comes the Q4 corporate earnings season, which gets underway on Friday, January 12. Earnings expectations for the full year are stout – strategists expect SPX EPS to rise from an estimated $221 of operating per-share profits in 2023 to $245 this year. With inflation ebbing, I expect more scrutiny to be paid to top-line figures from the world’s biggest companies. Also, lower interest rates could make share buybacks more doable, along with an uptick in M&A activity. For now, keep your eyes on the Santa Claus Rally as there have been just six negative SCR stretches since 1990, according to Ryan Detrick at Carson Group, and four of those years went out to have negative full-year returns.
AMEX:SPY
by mikezaccardi
1
Momentarily Bullish AgainOnce the last theory busted it was a return to the drawing board. I am now postulating we are back in Cycle wave B which I thought had been completed as initially forecasted during the summer 2023 (high was end of July). Not only was 4607 busted a few days back, it was blown out of the water today. What does this mean? With Cycle wave B now being larger than anticipated, Cycle wave C will likely last well through the 1st or even 2nd quarter of 2025. This likely indicates something worse than I initially forecasted will happen. The event or events will devastate economies enough to likely see the S&P 500 index lose close to half its value from the pending top. China taking Taiwan and temporarily controlling a majority of the microchips and production facilities will hold the world hostage. If a larger scale war breaks out, it will likely end or the tide will turn by 2025. I am still very bullish long-term, but will be bearish again around the end of this month. Here are the re-mapped modified wave counts CYCLE B PRIMARY A INTERMEDIATE 1-2 INTERMEDIATE 3-4 INTERMEDIATE 5 PRIMARY B PRIMARY C (so far) What levels are the models forecasting The levels to the right of the main chart are the historical quartiles for Cycle wave B end points. The 3 largest retracements are in red as 2 of them went beyond 100% (which is 4818 and would be a new all-time high). The levels to the left are the same historical data as it relates to movement extensions for the possible end point of Primary wave C inside of Cycle wave B. Models for Cycle B end: 2040 hours to 2059 ( this seems a little quick if Minor wave 3 just finished or is wrapping up). The lower white box is 4740-4755. The higher white box is 4790-4818. I figure we have at least a week left of this thing, maybe through end of year depending what Minor 4 does. 2,091 hours is next Friday and is what I stretched the top box out to. Models for Primary C in Cycle B end: Top yellow box is 4910-4920 for market top price. Middle yellow box is 4870-4880. Lower yellow box is 4790-4818. The duration models are all over the place. I will ignore the 2 largest values because they are the lengths of Primary wave A (1442 hours), and Primary wave B (1358). As I have mentioned before, common ratios of waves A to B and to C are 1:1, 1:2, 1:3, 1:4 (and those inverses) when the durations are very small (a few hours long) for micro wave sets. We are dealing with a macro wave in the current instance. Third strongest agreement is 679 hours which is half of Primary wave B's length which will also be ignored. After discounting the common ratios, the strongest agreement is at 220-250 hours, secondary agreement is 480-490, third is 270-290, fourth at 340-350. 232 hours aligns with the end of the lower white box which I assess to be too quick. 290 hours aligns with December 28th. I have placed the yellow boxes at 270-290 hours which straddles the holidays. Additional Calculations for Primary wave C: Primary wave B (1358 hours) was a slightly shorter duration than Primary wave A (1442). This means wave A's duration was 1.0619 times larger. I have sought similar situations when A is 1-1.11 times greater than wave B to understand potential characteristics of our current Primary wave C. Primary wave C is shorter 85.7% of the time. Based on these historics and applying prior ratios to the current conditions for Primary waves A and B, Primary wave C could last between 262-595 hours on the low end, and 711-830 hours on the high end. The market top has a low-end target between 4715-4794, a median at 4878, and high-end at 5096-5496. Based on the move back to Cycle wave B, the current data suggests the next market top could occur before the end of the year and we may fall just shy of 4818. The current setup reminds me of 2000-2009 but on a shorter scale duration wise. The market topped in March of 2000, found a bottom in October 2002 (which I call the end of wave A), moved above the prior market top by October 2007 (end of wave B), and the final wave C and market bottom was March of 2009. I see the similar thing playing out between January 2022-somewhere in early 2025. I will produce an additional analysis based on Minor wave 3 and Minor wave 4 inside of Primary wave C by tomorrow at the latest.
SP:SPX
by StockSignaler
1
IWM: A $240 Target in 2024. Here's Why It's Doable.Flip on financial TV and you will likely hear a plethora of sellside strategists and buyside portfolio managers voice optimism about small-cap US stocks. Consider that the iShares Russell 2000 ETF (IWM) was easily in negative territory on the year back in October. Fast forward just two months and the small-cap ETF is up close to 20% total return in 2023. The quick switch has come about amid the group’s fastest move from a 52-week low to a 52-week high in its history. IWM is now poised to print its third-best two-month rally since its inception more than 20 years ago. Is there more room to run? I think so. A breakout above the $200 mark, particularly on a weekly, monthly, and yes, even a yearly closing basis, is significant. Recall that IWM found support in the low $160s on a few occasions in the last year and a half after printing an all-time high above $240 in November 2021. Sellers flexed their muscles three separate times in 2022 and 2023 at the $200 mark. This $40 zone appears to be breaking in the bulls’ favor. That suggests a measured move upside target to $240 – close to the all-time high on IWM. I see some near-term resistance in the $210 to $215 area – the range lows from 2021. Indeed, there is likely a significant amount of ‘dead bodies’ lingering above $210 that may look to supply the market with shares in order to sell at the breakeven mark. Still, the technicals appear positive despite some near-term overbought readings on IWM. Another cautionary signal is that the January through mid-March stretch has featured some volatility at times for the broad market, so the pace of the advance will likely slow. I remain constructive on small caps looking into 2024, though.
AMEX:IWMLong
by mikezaccardi
End of impulse pattern? or trend extensionHello there, I hope you're having a great start to the new year. I wish you all the best in your trading ventures and a happy new year with your loved ones. I'm a fan of the Elliott wave principle, which I find interesting and useful for market analysis. I've developed my analytical approach by combining this principle with my personal experience and considering various scenarios that are likely to occur in the market. Although I'm going to share my analysis with you, please note that I won't be providing a buy or sell signal. My goal is to share my unbiased analysis so that you can use it as a guide to make an informed decision. To give you confidence in my analysis, I'll always share my previous analysis from the same market so that you can compare. All the details of my analysis are clearly labeled, making it easy for you to understand. I hope my analysis will be useful to you in your business journey, and I wish you the best. I'm waiting to hear from you. Finally, I'd like to remind you that like-mindedness and support, comments, and likes are the most important pillars of progress, like support points in the financial markets. They give me the energy to continue and share more ideas with you. Sincerely,
SKILLING:SPX500Long
by mehdi47abbasi79
SPY | SHORTAMEX:SPY Target Price1: 400$ Target Price2: 390$ Price Action: After a general uptrend from early 2021 to mid-2022, the price began to exhibit bearish behavior. As of late 2023, the price is seeing another decline. Support and Resistance: The price is currently approaching a significant support zone. If this support holds, we might expect a bounce. However, if broken, further decline is likely. Volume Profile: The histogram on the right showcases volume nodes, indicating areas of significant trading activity. There's a prominent volume node around the 390 mark, confirming it as a significant level. Historically, prices tend to be attracted to these high-volume areas, acting as magnets. Moving Averages: MA200 (Blue Line): This is a significant long-term moving average, and the price is going down to hit the MA200 as a major support level.
AMEX:SPYShort
by shkspr
1
🔥 S&P 500: Curve Analysis (6W) 🔥(Position Trade) SLO2 @ 4615 📉 SLO1 @ 4200 📉 TP1 @ 3410 TP2 @ 2745 TP3 @ 2255 TP4 @ 1550 BLO1 @ 1440 ⏳ BLO2 @ 875 ⏳ ADDITIONAL INFO: 🔥 Using this new ATH gives us a new HTF Curve ✍️ I'm anticipating the probability of POC @ 3489 will change from Support to Resistance 📉 If this curve holds, then we should expect a MASSIVE MARKET CRASH down to the mean around 1440 Major Support (Proximal) @ 1707.80 Major Support (Distal) 1342.60 ⚠️ Once PA reaches Demand this will be our signal that the Market as a whole is returning to a healthy state 🔑 ATH = ALL TIME HIGH BLO = BUY LIMIT ORDER HTF = HIGH TIME FRAME PA = PRICE ACTION SLO = SELL LIMIT ORDER TP = TAKE PROFIT Long-term time frames (1 week to 1 year): — Shows the big picture, revealing major trends and economic factors. — Less volatile, price movements are slower and smoother. — Suitable for long-term trend trading and position trading. — Requires less frequent monitoring but may offer fewer trading opportunities.
OANDA:SPX500USDShort
by ProfessorCEWard
Big Degree Ending Diagonal ???Hello! I am a big fan of the Elliott wave principle, which I find very interesting and useful for market analysis. I have developed my analytical approach by combining this principle with my personal experience and considering various scenarios that could occur in the market. While I would like to share my analysis with you, please note that I am not providing a buy or sell signal. My primary intention is to share my unbiased analysis so that you can utilize it as a guide to make an informed decision. To build your confidence in my analysis, I always share my previous analysis from the same market so that you can compare and see the progress. All the details of my analysis are clearly labeled, which should make it easy for you to understand. I hope that my analysis is useful to you in your business journey, and I wish you all the best. I am looking forward to hearing from you. Lastly, I would like to mention that like-mindedness and support, comments, and likes are the most important pillars of progress, just like support points in the financial markets. They give me the energy to continue and share more ideas with you. Sincerely
BLACKBULL:US500.FLong
by mehdi47abbasi79
Market Top Within 2 Days Or Less?I am bearish again already (surprise)! The terror in the Red Sea could be the tipping point for future economic calamity now that multiple companies have chosen the longer path to market around South Africa. Going on the premise Minor wave 4 dropped with a quiet whimper, we are possibly in the final Minor wave 5 up. First task is to identify potential tops. The far right percentage levels are the historic retracement levels from a prior analysis for the Cycle wave B top. The solo value to the left is the nearest potential top for Primary wave C (movement extension at 115.13% of Primary wave A). Similar levels for the top of Minor wave 5 are the inner percentage lines on the right. Half of the historic levels are between 4738.57-4794.712. The second study has the most agreement at a top between 4760-4780. Very few models are looking for a top beyond 4785 at this time. Duration models agree the most at 24 hours which was the length of wave 2, but we are in a micro enough of a stage that this level is valid. Another duration pocket is 35-36 trading hours long. Today's close already puts Minor wave 5 at 16 hours long. Third pocket of agreement is 20-22 hours which would occur prior to tomorrow's close. My derivative model has the largest price range at 4770.30-4864.91, tighter range at 4801.75-4854.92, most specific at 4833.20-4844.06. The duration models are at 4-24 hours, 9-22, and 14-18 hours. The final study compares relationships of the other microwaves against similar historical ratios. Minor wave 1 was 0.3174 the movement of Minor wave 3, while Minor wave 2 was 1.1958 times the movement of Minor wave 4. I compared 1:3 values that were 0.28-0.35 and 2:4 values that were 1.1109. This data suggests the length of Minor wave 5 could be between 19-24 hours, with strongest agreement at 22-24 hours. The data suggests the top is no higher than 4797.90, and likely between 4754-4774. I am looking for a possible top in 18-24 hours between 4759-4776. Hour 24 would be the first hour of trading on Wednesday. Last week, when I thought Minor wave 4 was yet to be finished my top was this coming Friday. This move up may be too quick, however, today's new high likely confirms Minor wave 4 had ended prior to my last analysis projecting its end thus making a earlier market top plausible. This theory of the market topping will likely require a few days to confirm which won't be visible until next week, unless the market drops quickly in some regard before this week's end. Happy Holidays as volatility appears ready for a dynamic return!
SP:SPXShort
by StockSignaler
🔝 Nasdaq-100 Index: The House of Rising SunThe History is happening right here! ✨ Nasdaq-100 Index NASDAQ:NDX just set its Best First Half in almost 40 years since inception in 1985, with amazing 38.75% year-to-date return in 2023. Among all semi-annual results, Nasdaq-100 gain this year is second only to the year of 1999. With historical 61.44% gain in the second half of 1999, glory times shortly ended. Just two months later in the 1st quarter of 2000 index peaked at 4816.15, for the next 15 plus years. As 38.75% surge in 2023 still far away from the All-the-history record 61.44% in 1999, stocks feel this year like they are, as the great 1960's band "The Animals" said, in the House of the Rising Sun. They won the race, and closed the 1st half of the year with solid gains. Let's take a look and congratulate the winners of the race! ✨ 🥇 The 1st place - Nvidia Corporation, 184.84% YTD return NASDAQ:NVDA Nvidia is the clear winner in the AI arms race so far. It's the company that appears best positioned to dominate the burgeoning sector, and more and more investors continue to wake up to the potential of artificial intelligence. Nvidia effectively provides a one-stop shop for what customers need to drive their AI ambitions. They control their entire ecosystem on both hardware and software, similar to Apple, and that puts them years ahead of competitors. 🥈 The 2nd place - Meta Platform Incorporation, 133.66% YTD return NASDAQ:META Meta Platforms stock jumped this year after the tech giant's first-quarter earnings beat Wall Street's expectations. CEO Mark Zuckerberg also touted the tech giant's AI plans, and pledged to keep costs low as the owner of Facebook, WhatsApp and Instragram continues its "year of efficiency." In a post-earnings call, Mark Zuckerberg hailed the company's AI efforts and vowed to keep a lid on spending. The Meta founder and CEO said AI recommendations had led to people spending over 24% more time on Instagram since it launched TikTok rival Reels. 🥉 The 3rd place - Tesla Incorporation, 120.88% YTD return NASDAQ:TSLA Tesla's stock price has been rallying non-stop for months - and Wall Street is starting to ponder whether that breakneck surge might've made the EV stock a little overvalued. Shares have jumped 57% since late April, with investors cheered by CEO Elon Musk signing charging deals with Ford and GM, while Big Tech stocks have also soared more broadly thanks to the rise of AI as an investment theme. The stock just has settled its best two-quarter advance since 2020. But Barclays, Morgan Stanley, and Goldman Sachs have each questioned that valuation over the past two weeks, with all three banks slashing their Tesla rating from "buy" to "hold". Unprecedented dominance It's historically rare for a handful of stocks from the same sector to make up such a large part of the S&P500 ( SP:SPX ). The last time the five biggest companies by valuation accounted for a quarter of the index's total market cap was indeed the 1960s.
NASDAQ:NDX
by Pandorra
2
$SPY Bull Flag 4 Hour ChartAMEX:SPY Bull Flag 4 Hour Chart, A bull flag is a technical analysis pattern that often signals a continuation of an existing uptrend. It is considered a bullish pattern and is identified by two main components: 1. **Pole (Flagpole):** The first part is a strong, upward price movement called the pole or flagpole. This represents a rapid increase in price over a short period. 2. **Flag:** Following the pole, there is a consolidation or retracement, forming a rectangular-shaped pattern known as the flag. The flag is characterized by a series of lower highs and lower lows in a relatively narrow price range. The pattern suggests that, after a strong upward movement, traders take a pause to consolidate their gains, causing a temporary pullback. However, this consolidation is seen as a period of rest before the upward trend resumes. The breakout from the bull flag typically occurs in the direction of the initial trend, leading to a continuation of the upward movement. Traders often use technical analysis tools such as trendlines and support/resistance levels to identify and confirm the pattern. I still expect another dip before Christmas to buy into. The Santa Claus rally starts on December 21 and lasts until the first week of the new year. Our support blue line level in the chart will be key to seeing how the price moves
AMEX:SPY
by AlgoTradeAlert
Profit Taking On Friday?Minor wave 3 has possibly ended on cue with the high at the open today. If this holds, next stop should occur quickly with a Minor wave 4 bottom. The historical models of common retracement percentages are on the right. The three maximum models are red at the bottom. The pink levels are the quartiles for the most specific relational data and generally contain the bottom among the three levels. Light blue lines are next slightly broader data set and the yellow are the broadest dataset. The second study has the largest agreement for the bottom in a very tight range of 4685-4690 which is the top green box. The larger green box contains the top and bottom of the next range and likely a more probable location for the bottom. This is between 4645-4680. The same set of modelling is also used to determine duration for Minor wave 4. The strongest agreement is at 24 hours long with second at 7 hours. These are the lengths of waves 2 and 3 respectively and possibly unlikely as mentioned in prior analyses, however, we are in more of a micro wave with the Minor waves and those levels cannot be ruled out as they would be in a long duration macro wave. Next agreement is 14 hours (possibly encouraged as a multiple of 7 hours) and then 21 hours. Just like there are two boxes of interest when it comes to price I have the same for duration. The top box is the 7 to 14 hour area and the larger green box is 7-21 hours. The next study is my newer derivative model. The bottom should be contained in the light blue box (which is yet to be entered indicating more downward action tomorrow). This is between 2-20 trading hours. The price should be between 4636.95-4693.03. A more specific area for the bottom is the orange box between 3-13 hours and 4638.53-4679.26. The most specific target region tiny pink/magenta box) from median data is between 4652.01-4665.49, however, the duration has already been busted. The final study seeks specific ratios of the other micro waves in the current macro wave to identify common historical waves. Minor wave 3 so far gained 192.07 points while Minor wav 1 gained 60.97. Wave 1/ Wave 3 is 0.317436. Similarly working Minor wave 2's loss of 52.89-->Wave 1/Wave 2 is 1.15277. I sought all micro wave 4s in which the prior micros held a 1/2 ratio between 1.1 and 1.2 AND 1/3 ratio between 0.28 and 0.35. I further determined what those wave 4s did and developed potential targets for the current wave 4. This data puts the duration between 6-8 hours and 8-19 hours. The bottom is contained between two pockets at 4673.9-4693.1 and 4663.4-4673.9. Ideally this has the bottom no lower than 4663 and lasting less than 19 hours. Considering all of the data and projections from the studies. It looks like the bottom of Minor wave 4 could occur as soon as tomorrow but no later than Monday. My forecast for the bottom is inside the white box between 4663-4680. This could be as simple as profit taking from the amazing bull sprint in the past 6 weeks. If this target zone is hit on Friday, I should lay out forecasts for Minor wave 5 and the final market top this weekend. I continue to lay all models out as part of my testing and refinement to see which ones work or are working, versus which models can be discarded. Although the biggest key is historical data may not be indicative of future behavior.
SP:SPXShort
by StockSignaler
3
RSP performing better than $SPX, good news for breadthThe AMEX:SPY is underperforming AMEX:RSP (equal weight SP:SPX ). This means that underperformers could very well pick up the slack & outperform the Big 7 going forward. They have been performing well. The Volatility Index TVC:VIX is down on the day BUT up from open. Will the moving avg's push it lower or do we get some sort of support here? This is a MAJOR SUPPORT level! TVC:VIX rarely gets close to oversold, let alone oversold. AMEX:SPXS AMEX:SPXL #stocks
AMEX:RSP
by ROYAL_OAK_INC
Investigating the idea of SP 500 analysis after two months Hello! Investigating the idea of SP 500 analysis after two months (conservative idea) Based on the Elliott wave principle I am a big fan of the Elliott wave principle, which I find very interesting and useful for market analysis. I have developed my analytical approach by combining this principle with my personal experience and considering various scenarios that could occur in the market. While I would like to share my analysis with you, please note that I am not providing a buy or sell signal. My primary intention is to share my unbiased analysis so that you can utilize it as a guide to make an informed decision. To build your confidence in my analysis, I always share my previous analysis from the same market so that you can compare and see the progress. All the details of my analysis are clearly labeled, which should make it easy for you to understand. I hope that my analysis is useful to you in your business journey, and I wish you all the best. I am looking forward to hearing from you. Lastly, I would like to mention that like-mindedness and support, comments, and likes are the most important pillars of progress, just like support points in the financial markets. They give me the energy to continue and share more ideas with you. Sincerely,
SP:SPXLong
by mehdi47abbasi79
Weekly Macro S&P 500 AnalysisThe 4270.00 level can contain selling through Q1, above which 4634.50 remains a 3 - 5 week target, 4864.25 likely over the next 3 - 5 months. Upside, 4634.50 can contain weekly buying pressures, while closing above 4634.50 indicates the targeted 4864.25 by the end of February where the market can top out into Q2. Downside, a settlement below 4270.00 signals 4113.50 within 2 - 3 weeks, secondary long- term support able to contain selling into later in 2024 and above which a longer-term bullish dynamic remains in effect over that time horizon.
CME_MINI:ES2!
by SpecialeAnalysis
Wave One Expanded As Five Wave Up??Hello there! I am a big fan of the Elliott Wave Principle, which is very interesting and useful for analyzing the market. I have developed my analytical approach by combining the principle with my personal experience and considering various scenarios that may occur in the market. Although I want to share my analysis with you, I want to emphasize that I do not provide buy or sell signals. My main intention is to share my unbiased analysis so that you can use it as a guide to make informed decisions. To build your confidence in my analysis, I always share my previous analysis of the same market so that you can compare and see the progress. All the details of my analysis are clearly labeled, which should make it easy for you to understand. I hope that my analysis will be helpful in your trading journey and wish you all the best. Sincerely,
SKILLING:SPX500Long
by mehdi47abbasi79
2
SP500 AND VOLATILITYMost of the time, there is a correlation between the SP500 index and it's volatility. As you can see in the chart, a trend reversal occured in SP500 almost everytime VIX dipped. Now, SP500 is at a major resistance and the VIX is at the lowest level of the recent time. It wouldn't be surprising to see a reversal for SP500 at this point. Where can be a recovery level if a reversal occurs now? There are two strong support levels below the price, thinking the SP500 is greatly sensitive to weekly averages. I think recovery point will be either one of the below. Where the 20-weekly MA (thin one) and 0.382 of the last impulse wave coincides The area between the 50-weekly MA (thick one) and 0.618 of the last impulse wave.
SP:SPXShort
by laterrasanta
1-Treasury bills give the same returns as S&P 500 with less riskWall Street Investment banks are predicting various prices for the S&P 500 close at the end of 2024. But if the current 1-year Treasury Bill Yield is the same as the estimates then why bother buying the S&P 500? It would be safer buying bills and you may get an equal return. This piece of analysis will look at: Historical accuracy of Wall Street Banks S&P 500 estimates for the year ending Current predictions for S&P 500 estimates for year-end 2024 The current yield on 1-year Treasury Bills Comparison between the estimates for the S&P 500 vs. 1-year Treasury bills. Historical analysis According to research done by Bespoke Investment Group and by CNBC. Excluding 2008, the analyst overshoot of the S&P 500 actual performance over the past 15 years goes down from being over 9% off to a miss of 3.4%. And the fact that analysts overshot the actual market performance 12 out of 15 times, means they did undershoot it three times. When looking at their S&P 500 price target prediction, analysts undershot the actual performance in seven of the past 20 years.1 Historically, these forecasts have often underestimated the actual market performance, especially during the bullish period since 2009, when they were off target seven out of nine times. The average annual projection tends to be around 9.3%, aligned with the S&P's historical average gain. 2 So, overall, excluding the outlier of 2008, analysts tended to overshoot their predictions of the S&P 500 performance by a decreasing margin over the past 15 years, moving from an initial overestimation of over 9% to a more moderate miss of 3.4%. Their track record shows a pattern of overshooting the market's actual performance in 12 out of 15 instances, with just three instances of undershooting. Current predictions BMO Capital Markets: $5,100 Deutsche Bank: $5,100 RBC Capital Markets: $5,000 UBS: $4,700 Goldman Sachs: $5,000 Bank of America: $5,000 Barclays: $4,800 Wells Fargo: $4,600 Morgan Stanley: $4,500 J.P. Morgan: $4,200 Average = $4,800 Median = $4,900 Mode = $5,000 1-Year Treasury Bill The current yield on the 1-Year Treasury Bill is 5.061%. The reasons for the yield being somewhat high are: Strong Economic Data: The resilience of the U.S. economy, especially the robustness of the jobs market, has surprised many experts. Despite expectations for a slowdown, the economy continues to perform well, leading to higher yields. The Federal Reserve's cautious approach to cutting interest rates too quickly is another reflection of this strong economic backdrop. Fed's Cautionary Stance: The Federal Reserve is wary of cutting rates swiftly due to concerns about inflation and the tightness of the labour market. They aim to maintain a balanced approach, keeping rates at a level that won't spur excessive inflation but also won't hinder economic growth. The shift in Fed Messaging: Recent messaging from the Fed indicated less aggressive rate cuts in the future than previously expected. This change in outlook, particularly with the Dot Plot showing fewer rate cuts in 2024, has influenced bond market sentiment. Increased Treasury Issuance: The U.S. Treasury's substantial pace of issuing new debt has disrupted the supply-demand equilibrium in the bond market. The unexpected announcement of raising a significant amount of money through bond sales has added pressure to yields as more bonds flood the market. Yield Curve Dynamics: The yield curve, which had previously inverted (short-term yields higher than long-term yields), is now experiencing a lessening of this inversion. Typically, this occurs as short-term rates fall while long-term rates rise. However, the current situation is unique as the long-term yields are increasing while short-term rates remain relatively stable. The surge in Treasury yields reflects a confluence of factors: a resilient U.S. economy outperforming expectations, the Federal Reserve's cautious approach to rate cuts amid concerns about inflation and a tight labour market, a shift in Fed messaging signalling fewer future rate reductions, increased government borrowing, and the unique dynamics of the yield curve. This unexpected rise in yields diverges from earlier predictions of a decline, shaping the current landscape of the bond market and influencing borrowing rates for consumers and businesses alike. One's prediction of the future yield in a year may be higher or lower. But regardless, when you buy a bond it is stuck at that yield since it represents the interest earned. S&P 500 vs Treasury bills Yesterday's close of the S&P 500 was $4,567.18. If we assume the S&P 500 will reach the average and median estimates that represents a 5.10% and 7.13% return on investment respectively. However, as we have established above looking at the historical analysis of Wall Street estimates they tend to overestimate. Most of the time the S&P 500 closed below their estimate. Wall Street estimates between 2000 and 2018 have an average overshoot of 4.40% from the table above. So there is reason to assume they will do the same this year. If we assume the estate's average and median return of 5.10% and 7.13% respectively are overshooting. That means we might as well invest in 1-year Treasury Bills. Why? Because Treasury bills are safer, and guaranteed return and if they are giving similar returns to the more risker S&P 500 over the next year then why bother with the risker alternative? It makes more sense to just buy 1-year Treasury Bills. Conclusion In the landscape of investment choices for the year ahead, the comparison between the S&P 500 and 1-year Treasury Bills offers compelling insights. The historical analysis of Wall Street's predictions demonstrates a consistent pattern of overestimation, signalling a potential trend that might repeat itself in the current estimates for the S&P 500 for year-end 2024. With the current projections showcasing potential returns for the S&P 500, it's crucial to consider the safety and reliability offered by 1-year Treasury Bills, especially given their current yield, standing at 5.061%. The compelling argument arises when assessing the historical trend of overestimation by financial analysts in forecasting S&P 500 performance. If these estimations continue to overshoot, as historical data suggests, the seemingly safer investment in 1-year Treasury Bills could provide comparable returns with considerably lower risk. The prudent approach might lean toward the Bills, given their guaranteed return and stability, particularly if they yield similar or better returns than the potentially riskier S&P 500. The choice between the S&P 500 and Treasury Bills becomes a contemplation of risk versus stability. While the S&P 500 might offer potential gains, the historical trend and current projections invite consideration of the Bills as a safer and possibly equally rewarding investment option for the upcoming year. Ultimately, it might be prudent for investors to weigh these factors carefully before making their investment decisions for the year ahead. 1 www.cnbc.com 2 seekingalpha.com
SP:SPX
by BlackbearTrader