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Election to Elevation: 134 Global Lessons for Investors as Inauguration Nears!

/ January 22, 2024

The decision by Ron DeSantis to withdraw from the Republican presidential race highlights the potential impact of elections on financial markets, especially considering the upcoming political events in the U.S., India, Mexico, and likely the U.K. this year. Citi’s strategists analyzed the market effects of 134 elections across 17 countries, excluding periods of global market volatility such as the financial crisis and the COVID-19 pandemic. Contrary to expectations, their findings suggest that elections generally do not have a significant influence. Developed market equities experience some volatility around election day but typically maintain a mild upward trajectory before and after the polls. Specifically in the U.S., equity markets tend to show an upward trend leading into elections, with a continued ascent afterward. Sectors tied to economic cycles, in particular, tend to perform well post-election. Although volatility, as measured by the VIX, increases during election periods, it tends to subside later. A noteworthy finding is that while markets generally favor continuity, they adapt to “change” elections where policies undergo a shift, albeit with a delay of around four to five months. Initially, right-leaning parties are preferred, but after about five months, markets adjust positively to left-leaning parties, which tend to perform better after six months. In emerging markets, equities often decline leading up to elections and then experience an upswing afterward. The markets with upcoming elections this year show mixed results. Indonesia, Taiwan, and South Africa tend to see positive trends six months post-election day, while India and Mexico show a tendency to trade somewhat lower. Emerging markets typically lean towards favoring change over continuity candidates. Despite prevailing political uncertainties, the S&P 500 has demonstrated resilience, recording a 1% gain this year and achieving a record high on Friday. Over the past 52 weeks, the index has posted a notable 22% increase. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Market News

Investor Alert: S&P 500’s Historic Close – What’s on the Horizon?

/ January 20, 2024

The S&P 500 experienced a month of tight trading range volatility due to uncertainty surrounding interest rates. Breaking the trend, on Friday, the S&P 500 achieved its first record close in over two years, setting a new intraday record after being confined within a narrow trading range for almost a month. Closing the day at 4,839.81, it surpassed the previous record close of 4,796.56 set on Jan. 3, 2022. Additionally, it reached an intraday high of 4,842.07, surpassing the prior intraday record of 4,818.62 from Jan. 4, 2022, according to FactSet data. This development unfolded amid a turbulent start to the year for stocks, attributed by analysts to a resurgence in Treasury yields and uncertainty about a potential March interest-rate cut by the Federal Reserve. The breakthrough on Friday marked the end of a 512-trading-day stretch without a fresh record closing high for the S&P 500, concluding the longest such period since the 1,375-trading-day streak from October 2007 to March 2013, according to Dow Jones Market Data. The beginning of the new year saw U.S. stocks on a downward trend, retreating from near-record highs due to solid economic data and Federal Reserve officials pushing back against expectations of aggressive rate cuts, introducing uncertainty about the 2024 monetary policy. This, in turn, propelled longer-term Treasury yields to their highest levels since December. Throughout January, the S&P 500 remained within a short-term trading range established since mid-December, fluctuating between intraday levels of approximately 4,700 on the downside and slightly above 4,800 on the upside. However, it failed to close above its previous record-high of 4,796.56 during this period, according to FactSet data. Steve Sosnick, chief strategist at Interactive Brokers, noted that trading ranges are common when approaching record highs, as resistance is to be expected. Nevertheless, a solid recovery on Thursday, driven by an optimistic 2024 outlook from chip maker Taiwan Semiconductor Manufacturing Co., led megacap technology stocks to erase all their 2024 losses and propelled the S&P 500 and the Nasdaq Composite. Anticipating that record highs for the S&P 500 will attract more market participants, Sosnick emphasized that optimism about artificial intelligence and fourth-quarter earnings outweigh concerns about the Fed’s rate-cutting pace. Traders tend to focus on narratives that align with prevailing market sentiment. While some technical indicators suggest a potential pullback or correction, historical data indicates positive returns a year after returning to record territory following a gap of at least a year. Despite uncertainties, U.S. stocks surged on Friday, with the Dow Jones Industrial Average closing at a record high of 37,863.80, its second of the year, and the Nasdaq Composite advancing 1.7%. For the week, the S&P 500 rose 1.2%, the Dow industrials gained 0.7%, and the Nasdaq Composite surged 2.3%, according to FactSet data. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Market News

Trillionaires’ Tactics: Mastering the Stock Market Game for Every Investorc

/ January 19, 2024

In 2023, the Trillionaires, consisting of seven U.S. companies valued at $1 trillion or more—Alphabet Inc. (Google’s parent), Amazon.com Inc., Apple Inc., Meta Platforms Inc. (Facebook’s parent), Microsoft Corp., Nvidia Corp., and Tesla Inc.—took charge of the S&P 500, exerting a profound influence on the market’s trajectory, whether for better or worse. These corporate giants, dubbed the Trillionaires for their colossal valuations, added over $5 trillion to the S&P 500’s market capitalization in 2023, representing nearly 65% of the annual gain that boosted retirement accounts and index-fund portfolios. A similar concentration of market gains occurred in 2020, involving the same group of companies. Beyond mere market-cap growth, excluding Tesla, the Trillionaires played a pivotal role in pivotal market events. Nvidia, for instance, played a key role in ending the S&P 500’s earnings recession, and strategic moves by Big Tech prevented a decline in corporate America’s record profit margins amid rising inflation rates. Essentially, this exclusive group not only orchestrated the market rebound in 2023 but is also central to expectations for 2024 and beyond. Considering the Trillionaires’ impact on the S&P 500, one might question the traditional investment thesis of S&P 500 index funds, which relies on random diversification and numerical principles. However, Deep Dive investing columnist Phil Van Doorn reassures that the S&P 500 is inherently self-correcting, favoring success over time. While this might hold true in the long term, challenging these deeply entrenched and well-capitalized incumbents poses a significant hurdle for potential rivals. Short-term challenges may emerge, particularly in the realm of artificial intelligence windfalls and associated costs, potentially delaying the anticipated growth in profit margins during the AI era. The broader narrative also raises existential questions about whether these companies should shape the market and economy. As they embrace AI for automation, leading to layoffs, Silicon Valley develops software with broader applications, prompting reflection on the trade-off between higher profit margins and a potentially diminished labor market. Consequently, these companies, prompting such contemplation, merit a more fitting epithet than a reference to Hollywood gunslingers. Moreover, the Trillionaires warrant scrutiny as they navigate the market through an uncertain future, prompting considerations of potential monopolization, even though antitrust law does not directly apply to the stock market. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Market News

S&P 500 Futures Surge: TSMC’s Results and Treasury Yields Play Key Roles

/ January 18, 2024

Thursday witnessed a marginal uptick in U.S. stock index futures as Asian market concerns eased, accompanied by a dip in Treasury yields. Current Futures Activity: On the prior day, the Dow Jones Industrial Average (DJIA) declined by 94 points or 0.25% to 37267. The S&P 500 (SPX) witnessed a 27-point drop or 0.56% to 4739, while the Nasdaq Composite (COMP) slipped by 89 points or 0.59% to 14856. Market Influences: Market movements continue to be influenced by bond market dynamics. The positive aspect for equity enthusiasts is the gradual decline in Treasury yields, providing a stabilizing effect on index futures. The S&P 500 has faced volatility at the beginning of the year, stepping back from recent highs as investors adjusted their expectations concerning potential interest rate cuts. This adjustment has led to increased implied borrowing costs. The 10-year Treasury yield (BX:TMUBMUSD10Y) rose over 30 basis points from its December 27 low of 3.8% by midweek. This rise was fueled by central bank officials pushing back against rate-cut expectations and a surge in response to robust U.S. retail sales data. The noteworthy tight correlation between bond and equity markets in 2024 may not persist indefinitely, according to historical patterns. Presently, both markets experienced a sell-off as investors scaled back expectations for imminent rate cuts. Traders are adjusting their expectations for a 25 basis point rate cut by the Federal Reserve at its March meeting, with the probability decreasing from 73.3% a week ago to 63%. U.S. futures found support from the improved performance of Asian markets. Hong Kong’s Hang Seng (HSI) rebounded by 0.75%, recovering from a 3.7% plunge on Wednesday. The Shanghai Composite (SHCOMP) also regained stability with a 0.4% gain. Taiwan Semiconductor Manufacturing Company (2330, +1.20%) exceeded analyst forecasts, potentially providing support to the Nasdaq Composite index in the U.S. The ongoing mixed earnings season includes reports from Fastenal (FAST, -0.61%), First Horizon (FHN, -0.23%), and KeyCorp (KEY, -0.57%) before the opening bell. After the close, PPG Industries (PPG, -0.47%), J.B. Hunt Transport Services (JBHT, +0.40%), and First National Bank (FNB, -0.61%) are set to report. Scheduled U.S. economic updates for Thursday include weekly initial jobless claims, the January Philadelphia Fed manufacturing survey, and December housing starts and building permits, all at 8:30 a.m. Eastern. Atlanta Fed President Raphael Bostic is slated to speak on the economic outlook at 7:30 a.m. and again at 11:30 a.m. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Market News

Dow in the Red: Wall Street Reacts to Fed’s Waller’s Cautious Stance on 2024 Rate Changes

/ January 17, 2024

The US stock market ended on Tuesday with a decline, as investors weighed corporate earnings and a statement from a Federal Reserve member suggesting a decreased necessity for future interest rate cuts. How stocks traded Last week, stock prices saw an increase, with the S&P 500 finishing on Friday just 0.3% below its all-time high closing point. What drove markets Traders approached the start of the week with caution as they assessed recent financial results from banks and negative updates about manufacturing. Moreover, they were reminded that there might not be any immediate plans for reducing interest rates. Christopher Waller, a member of the Federal Reserve board, announced on Tuesday that the central bank is likely to lower interest rates in the near future. However, he stressed the importance of not rushing the changes in monetary policy. Consequently, following his remarks, stock prices experienced a decline and bond yields saw an increase. Investors paid attention when Waller, who is famous for being more assertive, expressed worries about the potential of an economic slowdown that required actions to control inflation. The chances are very likely that the Federal Reserve will postpone making any adjustments to its policies during the January meeting. However, according to the CME FedWatch tool, there was a 68% possibility that interest rates would be reduced by 25 basis points in March. Following Waller’s remarks on Tuesday, this probability slightly dropped to 63%. According to Quincy Krosby, the chief global strategist at LPL Financial, the concept of a shifting market was already being talked about in March. Krosby noted that Federal Reserve officials, including Waller who is usually viewed as pragmatic and careful, now appear to be conveying a unified message to the markets, urging them to be cautious instead of acting hastily. Krosby states that the likelihood of a March interest rate decline is contingent upon the data received and the impact of escalating oil prices caused by issues in the Middle East. As investors start to receive fourth-quarter earnings, they are also getting new information about the future prospects of the economy. Goldman Sachs, Morgan Stanley, and PNC Financial Services disclosed their financial performance on Tuesday prior to the stock market’s opening. Additionally, Interactive Brokers and Pinnacle Financial Partners will be unveiling their earnings reports later in the day. Following the commencement of earnings season last Friday, JPMorgan Chase & Co. JPM, -0.63%, along with other prominent banks, disclosed their financial statements. The experts at BlackRock Investment Institute state that the markets can be significantly influenced by earnings. According to Jean Boivin, the leader of the BlackRock Investment Institute, the authors believe that there will be a greater focus on earnings this year compared to last year, as consensus expectations have risen. Data from LSEG suggests that there is an expected growth rate of up to 11% in the next year. The authors propose that the earnings season in the fourth quarter of 2023 will offer more clarity on the progression of these expectations. According to Boivin and his colleagues, even though companies are currently maintaining their profit margins, they anticipate that these margins will eventually revert back to average levels. This is likely to happen as a result of rising interest rates, ongoing wage growth, and decreasing inflation, which, though still higher than the desired target, is gradually decreasing. According to Krosby from LPL, markets are worried about how much control companies have over prices. There was more manufacturing data from the United States on Tuesday that needed to be considered. The factory index of the New York Federal Reserve dropped significantly from -14.5 in December to -43.7 this month, which is the lowest level since May 2020. It is crucial to assess whether these figures hold any major or minor importance. Investors should consider geopolitical conflicts as well. The heightened tensions in the Middle East have raised worries about potential disruptions in shipping through the Red Sea, which could lead to inflationary pressures. However, oil futures observed a decline on Tuesday. Companies in focus John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Market News

Financial Forecast: Unraveling the Factors Behind Another Wall Street Bank’s Bullish S&P 500 Outlook

/ January 16, 2024

Investors are bracing for a cool reception after an extended holiday weekend, as stock futures dip alongside rising bond yields following hawkish remarks from European policymakers on Monday. While the expected victory of former President Donald Trump in Iowa has generated discussions about a potentially tumultuous election year (refer to the chart below), Tuesday brings optimism from a Wall Street bank that has revised its year-end stock outlook upward. A team of strategists at UBS, led by Jonathan Golub, now projects the S&P 500 to reach 5,150 by year-end, up from the previous estimate of 4,850. UBS’s outlook from the previous year had already signaled favorable conditions for stocks, citing strong earnings, easing inflation, accommodative monetary policy, and an improved economic landscape. Golub and his team attribute their revised outlook to the recent shift in the Federal Reserve’s stance, a subsequent decline in rate expectations, and above-trend 2024 earnings per share revisions. This optimistic scenario is now considered their base case, surpassing even UBS’s wealth management arm, which recently raised its index target to 5,000. The bullish stance from UBS comes amid a rocky start for stocks, as concerns mount that investors, fueled by overly optimistic Fed rate-hike expectations, rushed into the market. Nevertheless, the S&P 500 remains just 0.27% shy of its January 2022 record close as of Friday. The bank’s new S&P 500 target reflects a 7.7% upside from the current levels. Additionally, they have increased their 2024-25 earnings per share estimates to $225 (from $235) and $246 (from $250), respectively. Golub and his team highlight that their growth estimates of 6.3% and 6.4% over the next two years are more conservative than the consensus of 11.4% and 12.8%. They emphasize that while earnings are expected to drive 2024 returns, declining interest rates should support higher multiples. UBS’s new S&P 500 target places it among the top forecasts on Wall Street for 2024. Yardeni Research leads with a target of 5,400, while JPMorgan is more conservative at 4,200. Goldman Sachs, in late December, raised its forecast to 5,100 from 4,700, shortly after setting the initial target. The Markets John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

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