$SPX500 2024 Guess for the Year $SPY

11 Jan

Here are the actual #'s for you to see the 2024 Wall Street analysts forecasts on the chart. Once those are charted in the black rectangles at the year-end price targets, we can see where there are concentrations of estimates and where investors might pause and sell as the target has been reached for the year.

And then I added in the 9% and 10% green lines to indicate the common average annual compound return of the stock market (excludes dividends).

I could imagine there will be multiple rejections of the cluster where people want to "lighten up at the target" into the election in November. I plotted three pullbacks from the resistance area and then once the doubt is no longer hanging over the market, it can rally and the money chases into stocks.

Election years have often been sideways grind and this year seems like more of the same. The media headlines are negative and investors are scared of a recession and another banking crisis. Inflation is always a fear and the Fed has hiked 500 basis points and although their language has shifted from "higher for longer" over to "easing ahead possibly three rate cuts in 2024" to paraphrase Jerome Powell at the Fed.

The stock market is unchanged after two years and many investors are shell-shocked from the bear market in 2022 and trying to fend off the lure of T-Bills and money market funds with their juicy 4%-5% yields which are the highest they have been in years. Take a look at my interest rate "guess" from last year when rates were near peak to show you what I was thinking back then (hint: topping, down to sideways. See link below).

This is my annual fun 'guess' which has been something I have done for about the last 10 years and with some luck it has at least acknowledged the big factors in the market and even if I am dead wrong I took a shot at it and welcome questions and comments.

Cheers to a healthy 2024 for everyone.

Tim

Jan 11, 2024 10:00AM EST

22 Apr

Catatan

Here we are April 22, 2024 and we have had a decent pullback after a strong start to the year. If we hit the "update" button on this chart, we can see if the outline for the year is still in tact. You can see how many Wall Street brokers were looking for a YEAR-END target about where the market had already reached so far this year. It is my contention that it makes people want to "cash in" some chips and sell a bit in case that is all we get for upside. This is what creates a pullback. Buyers stepping back and sellers at the margin which brings prices back down for a time of reflection.

The market is NEVER an easy game and this little trick of tracking Wall Street "Beginning of year estimates" has worked very well for a long time. We can still use it to create a game plan for the year because it is the one time each year when everyone collectively sticks their neck out and makes their prognostication for the year and as the year rolls along, there is only pressure around quarter-ends to put out a new, revised forecast for the market's likely outcome and with this being an election year, it is very likely that people get more and more "hedged" in their commentary. Toss in the extraordinary Gov't spending on foreign conflicts and deficit spending, and we have all of the ammo we need for a tumultuous and choppy year ahead.
The spike in VIX from 13 to near 20 is a sign of some illiquidity in the market which added to the move to the downside. Look for spikes in VIX to alert us to bottoms in the market. Look for price ranges in the SPY to reduce after a VIX spike to help lower risk on entry and the other tricks I have discovered that I have posted here so many times (5+ point VIX spike indicator and the VIX 75% retracement indicator).
Remember this is EARNINGS SEASON and it was coupled with VACATION WEEK for many of the portfolio managers here in the USA last week. Toss in rising VIX last week and we had the opportunity for a sharp pull back.
My advice: Step back and watch the earnings and mark the "EARNINGS LEVELS" of each stock on your charts using the EARNINGS LEVEL tool that I created here. The tool is now free here at TradingView for subscribers. If you are reading this, then you are likely able to get the tool for free. Look for the stock to return to the Earnings Level for an important support or resistance. You can use the level to help you discern the trend in any stock. The logic is "If you are ABOVE the earnings level, then the trend is UP". And vice-versa.
Wishing you all the best in your trading and investing. I am always in the Key Hidden Levels chat room although I have been able to travel a bit this past year with my wife retiring and celebrating here lifetime of teaching social studies to 8th graders. She deserves to travel and thanks to everyone for understanding my busy life schedule this past year. I also became a Grandfather a month ago. Wishing you all the best and look forward to your comments and questions!
Tim
4/22/2024 10:15AM EST