[Tiger Live Ⅴ] Technical Analysis, Downside & Upside Catalysts on SPX

Tiger_James Ooi
12-26 10:53

Here are quickly talk about technical analysis of $.SPX(.SPX)$ . Full live link replay >>

Let’s take a look at the S&P 500. Here are the Fibonacci confluence zones for the $.SPX(.SPX)$
To me, the major resistance is 6,850. TA tells me that 2025 target price is 6850.
If you are waiting for some support levels to accumulate, 5,900 or 5,500 may be good support levels.
To me, the S&P 500 must hold above 5,900 to resume the bullish trend.

Let me go through the downside and upside catalysts for the us equity market

What could potentially downset investors in 2025?

Firstly, even though I am not overly concerned about tariffs, they may be more damaging than I initially thought.

Secondly, investors are worried about a second wave of inflation due to Trump's expansionary plan, crackdown on immigration, and tariffs.

The blue line you see here represents the CPI year-over-year growth at the moment. It doesn’t seem like it is shooting up yet.

And you know what?

I don’t reckon you should be worried about a second wave of inflation right now. Don’t worry about something that may or may not happen.

The December 25 basis point rate cut was widely expected.

However, the Fed is expecting smaller rate cuts in 2025. Previously, in September, market participants were expecting 5 rate cuts in 2025. Two days ago, they were expecting 2 rate cuts.

And now, everyone is expecting just 1 rate cut in June 2025, and that's it. I think 1 rate cut for the entire year of 2025 is too pessimistic.

Because, as Jerome Powell said, the labor market is cooling. To me, it's high inflation vs. a weakening labor market.

The Federal Reserve is likely to cut more rates to support the labor market, because a cooling labor market is a bigger threat to long-term economic stability than inflation.

As long as the Fed is not hiking interest rates, I will stay constructive on the U.S. equity market.

Positive thinking:

If the Federal Reserve is slowing down the rate-cut cycle, the bull run may last longer.
Smaller rate cuts and a longer rate-cut cycle suggest that the U.S. economy is strong enough to handle higher interest rates,
which can help sustain the bull run for a longer period without triggering inflation or economic overheating.

Some other reasons that could cause a sell-off include:

•The equity risk premium is negative,

•Lack of market breadth,

•Expensive valuations.

Additionally, companies have spent a lot of (CapEx) on AI, which may compress profit margins.
Lastly, earnings growth may disappoint due to the high base effect.
Basically, if year-over-year (YoY) earnings growths  were 100% in 2023 and 100% in 2024, they may not be able to grow another 100% in 2025.
Investors should perhaps only expect smaller YoY growth in earnings in 2025.

Upside Catalysts in 2025

So, let’s talk about the upside catalysts in 2025.


Firstly, there could be a no-landing scenario, where there is resilient economic growth but inflation is close to the Federal Reserve’s target.

Secondly, AI is still driving the stock market.
Thirdly, multiple expansion. The P/E ratio for the S&P 500 is now 27x. It may continue to expand to 30x or even higher given the ai optimism.
Fourthly, investors are underinvested.

Basically, I look at two things to check if investors are still underinvested.
Firstly, money on the sidelines. There is still $6.7 trillion in money market funds (MMF). This is about 41% higher than the COVID high.

Secondly, FINRA margin debt.
FINRA margin debt is the amount of money investors borrow from margin accounts, and the amount is currently $815 billion, about 13% lower than its all-time high.
This indicates that investors may not have borrowed enough yet.

The earnings outlook for 2025 is not bad. It could help sustain the P/E ratio or even push it higher.

Lastly, Trump is good for the stock market.
During Trump 1.0, the $.SPX(.SPX)$ went up by 84% despite COVID19 and the trade war.

All in all, I am bullish on us equity market in 2025.

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Comment（2）

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  • bubbly9
    ·12-26 11:28
    Great insights on SPX! Keeping an eye on those support levels is crucial for strategic accumulation.
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  • LouisLowell
    ·12-26 11:28
    Great insights
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