Another 48h - DXY Outlook For 2025 Is Bullish - At Least Today

2025/01/04
Another 48h - DXY Outlook For 2025 Is Bullish - At Least Today
“if annual highs of 2023 & 2024 holds, it will go up in 2025!
only question is how high? until 112 points? even more?”



After a five-day decline, the US stock markets rose significantly on Friday. The DJIA closed with a gain of +0.80% at 42,732.13 points. The SP500 rose by +1.26% to 5,942.47 points. The technology-heavy NDX rose by +1.67% to 21,326.16 points. The stock markets received support from the re-election of Republican Mike Johnson as chairman of the US House of Representatives. "This suggests that Republicans are likely to rally behind President-elect Donald Trump's pro-business deregulation agenda," interpreted my friend cfd online broker analyst. On the one hand, investors are hoping that companies operating in the US will benefit from lower taxes and relaxed regulations under Trump. But on the other hand higher tariffs could also be a disadvantage and there are concerns that they will fuel inflation again. Which is why I have just closed all of our Daily 4XSetUps at the end of last year 2024 - and will wait until Trump is back in the White House, i.e. January 20, 2025, at least. Because historically, protectionism is associated with higher volatility on the stock markets. It basically tends to be bearish for stocks, as most listed companies not only offer their products and services worldwide, but also make profits. So the foreign exchange market and/or bond market is usually the biggest influencing factor in such scenarios.

While I am fundamentally bullish on the DXY today, at the start of 2025, I am fundamentally bearish on the US stock markets DJIA & SP500 and/or NDX today. But I don't dare to formulate a short daily 4XSetUp (yet)! Still prefer to wait until Trump takes office on January 20, 2025 - and then see what happens next? Because in the historical context the stock market is more than averagely too expensive - while the us annual growth rate was and/or is still not significantly higher than the us inflation. For example, let's take the Buffett Indicator (aka, Buffett Index, or Buffett Ratio) as an indicator for the stock market. The Buffett Indicator expresses the value of the US stock market in terms of the size of the US economy. If the stock market value is growing much faster than the actual economy, then it may be in a bubble. And this ratio fluctuates over time since the value of the stock market can be very volatile, but GDP tends to grow much more predictably. The current ratio of 208% is approximately 66.62% (or about 2.2 standard deviations) above the historical trend line, suggesting that the stock market is Strongly Overvalued relative to GDP.

“It's more difficult, you know, to bring about positive change than it is to make money. It's much easier to make money, because it's a much easier way to measure success - the bottom line. When it comes to social consequences, they've got all different people acting in different ways, very difficult to even have a proper criterion of success. So, it's a difficult task. Why not use an entrepreneurial, rather than a bureaucratic, approach. As long as people genuinely care for the people they're trying to help, they can actually do a lot of good.”
George Soros

115.110 : 2001/09/11 - High Before 911 (2001)
114.778 : 2022/09/28 - Annual High 2022
112.200 : 2001/09/17 - Low After 911 (2001)
109.533 : 2024/12/20 - Annual Year High 2024
108.922 : 2024/12/29 - last price action
107.348 : 2023/10/03 - Annual High 2023
102.979 : 2020/03/23 - High While Coronavirus Outbreak
100.157 : 2024/09/27 - Annual Low 2024
099.578 : 2023/07/14 - Annual Low 2023
094.650 : 2020/03/06 - Low While Coronavirus Outbreak
094.629 : 2022/01/14 - Annual Low 2022
In the historical context, 2 scenarios are important, for the USA, for the DXY - the terrorist attacks in september 2001, and/or also the coronavirus outbreak in march 2023. Which is also more or less reflected in the price action in DXY . Why? Because since 2001, the USA has sent itself into the largest debt organization in human history by seeming to lose itself in fantastic foreign military adventures, as well as the local ones. And since the coronavirus outbreak, people have relied on green economic policy, even identity politics, under the guise of liberal democracy, which sooner or later led to politically self-organized us stagflation. Which in our so-called west, most countries followed. That's why, surprisingly, at least for me, even if I also supported him, Trump was also re-elected. Of course, only the summarized tip of the iceberg - without losing track of any further details at this point. I actually believed in such a landslide success in 2022 - before the 2022 midterms! But 2024? Never!

Nevertheless, if we want to understand the price action in DXY and learn something every day, we have to take this into account - regardless of our political preferences (whether Democrats or Republicans). Which is why I want to formulate the big picture at this point, which is sometimes forgotten and even ignored in day-to-day business, but from which one cannot run away; shouldn't run away - especially if we want to learn from history, even not to make the same mistakes today, to help to create a better and/or brighter future. Because an extraordinarily indebted national budget is and has always been the nucleus for major disruption in any society. And that's why we should not only take into account the annual highs and lows of this year 2024, and/or also the annual highs and lows of last year 2023 incl. the annual high and low of the last year before 2022. But rather also the highs and lows, of the week of the terrorist attacks, in September 2001. And/Or even also in March 2020 during the Coronavirus outbreak.

These price actions do not play a significant role in day-to-day business - but they do in the historical context. And because we all have more or less memories and more or less all remember these two scenarios, including feelings and emotions, they should more or less also serve as support zones and/or resistance zones. But not without ignoring day-to-day business, based on current new information from central banks, the US economy, and/or other correlations with other price actions. And/Or basically, based on what I just tried to put in context in this post, we can see that the DXY tends to move in bullish terrain above 107.348 points, even the annual high of last year 2023.What then, in the event of a breakout from the annual high in 2024, can then lead to the price action during the 9/11 terrorist attacks in 2001, at more or less above 112 points in the course of 2025. Which is what I'm assuming today! But I will change every day at any time if the price action and/or circumstances change significantly?


With best wishes and good intentions:
Aaron



Another 48h - DXY ... is pure information material.
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