The year has started off quietly with many people disappointed that the so called “Santa Rally” did not carry through. Today we will try and look at a few charts that I think are important.
But first of all, for those people who weren’t around last week, my word for 2024 is RECESSION. As I mentioned last week, I hope I am wrong because if I am right, it won’t be pretty.
Starting off with the daily chart of the S&P. What jumps out at us here is my Geniuses. They went from fully invested (actually slightly hedged long) back to 70%. Not only that, with the holidays, this occurred over three trading days when the volumes were very low. I am amazed that New York wasn’t weaker with that amount of selling so I guess we could see that as a slightly encouraging sign. But goodness this week is going to be important. Can prices break through the recent high, or is it going to go on and form a little head and shoulders top here? I was looking for a high in January – at this stage Australia toped on the first trading day of the new year but New York scored its best in December. Still quite a few trading days left in January! And as a side note just a couple of weeks ago everyone was suddenly bullish on the Russell 2000 – just had six down days. Surely due for a bounce.
Overseas markets have all finished a bit mixed. Looking at Shanghai – the weakest of the lot – they are still in a nice downtrend and finished the year near its low. Can someone pull a rabbit out of the hat here? They need to or this downtrend might become even more pronounced.
But when we look at its near neighbour - Taiwan (weekly semi-log scale) – we see that it is still clearly trending up with only a few steps away from making a new high. As with a number of markets that look a bit like this, they need to get moving, or they will fail.
As I mentioned last week, I am still trying to work out what commodities will do if I am right about stock markets being at or near tops. There haven’t really been any clear clues this week. Copper is still my main worry as it just cannot seem to find any support. Gold and silver are still trading in the band of the past few weeks. Looking at DUST which is the 2 times bear of the gold miners index, we see that it has been in a downtrend since October. I think we might just have to keep an eye on this to try and get a fix on gold. A break of this downtrend would not be bullish for precious metals.
Coming back home – this week a different look at the XJO (20 cent three-point reversal chart). (Excuse the remains of a stray cup of coffee along the top!). This highlights all these tops up here going back to 2021. As we can see it started the year right at the top and then came back slightly. As with just about every market – an important week coming up. `
When we look at the weekly chart of our index and perhaps where we can make the best story which I have mentioned previously – could we break topside and run up to the return line of the long-term channel shown here? A lot resting on trading this week.
I saw this headline during the week “This is not America: rates won’t come down in 2024”. Obviously people are still not aware how closely aligned our rates have been and I believe will continue to be. Just a quick update of the weekly close of the ten-year bond yield. Australia black. US red. I don’t think people realise how much rates have come off already in the real market! In fact there is room for a rally here. If rates start to firm, then we will quickly find out whether I am right about the market or not.
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