🎁What the Tigers Say | January Effect Uncertainty: Rebound or Downtrend Ahead?

As we step into the new year, concerns loom over the market's potential resistance to the traditional "January effect." The recent dip in tech stocks, with $NASDAQ(.IXIC)$ witnessing a 1.63% drop, raises questions about the market's direction in the coming weeks. Amid this uncertainty, various indicators suggest caution.

Will the January Effect Prevail?

Below are some insights from Tiger @nerdbull1669, @KYHBKO and @JinHan. Which opinions do you agree with？

🎁Special Notes: Whoever showed up on the” What the Tigers Say” column will receive 100 Tiger Coins and an exclusive interview invitation to honor your contribution.

Click titles to read the full analysis:

1. @nerdbull1669: Things That Could Derail the U.S. Stock Market Rally in Early 2024

Key Points:

• From the SPX 50-day MA period, it is currently trading well above the level, so it could mean the possibility of profit taking resulting in a sell-off might be possible, at least for first 2 weeks of January.

  

  On top of that, we could have high valuations, economic data and geopolitics putting the market rally in January to a pause.

RSI Show That U.S. Stocks Already Overbought In December 2023

• Using the technical gauge (RSI - relative strength index), we can see from the chart below that U.S. stocks in S&P 500 are overbought for most of December 2023.

  

  Although the RSI has since pulled back, but it is still hovering around 70, which are still considered "overbought."

  There could be investors sentiment high favourable to certain industry but do remember that there is also risk of profit taking since investors might anticipate a pause in rally before major announcement like CPI for December.

  There are also earnings seasons coming up for Q4 2023 happening in January 2024, this might be something that could move the market either way.

2. @KYHBKO: Market Outlook of S&P500 for week of 01 Jan 2024 - using over 20 indicators

Key Points:

Market Outlook - 01 Jan 2024

Technical observations of the S&P500 1D chart:

• The Stochastic indicator has completed a top crossover and could range sideways. A downtrend is expected though it is also possible to range sideways.

• The MACD indicator has completed a top crossover completed. We should expect a downtrend soon.

• Moving Averages (MA). Both the MA50 line and the MA200 line are on an uptrend. The last candle is above both the MA 50 line and the MA 200 line. Thus, it could be read as bullish for the long-term and mid-term.

• Exponential Moving Averages (EMA). All 3 EMA lines are moving upwards and thus, implying an uptrend.

3. @JinHan: S&P 500 on the Horizon of Single-Digit Positives Amidst Divergent Institutional Views

Key Points:

• BCA Research: Bearish Stance at 3,300

• Predicts the possibility of the worst market crash since 2008.

• Points to a looming recession in the US and euro area, advocating a cautious approach given unfavorable risk/reward balance.

• JPMorgan: Bearish Outlook at 4,200

• Cites high equity valuations, rising interest rates, and weakening consumer trends.

• Identifies geopolitical risks and a potential recession as factors contributing to a challenging macro backdrop for stocks.

• Morgan Stanley: Neutral with a Target of 4,500

• Expects a flat stock market in 2024 with pockets of outperformance.

• Highlights the narrow leadership of mega-cap tech stocks, anticipating a breakdown in the future.

• Stifel: Neutral View Targeting 4,650

• Foresees a rise in the first half of 2024 before a plateau, underlining the potential for limited upside.

• Suggests mega-cap growth stocks may underperform relative to cyclical value stocks.

• NDR: Bullish Perspective at 4,900

• Eyes the Federal Reserve’s role in navigating a soft landing, with a 70% chance of success.

• Forecasts a 7% rise in the S&P 500, emphasizing potential choppiness in the first half of the year.

• Bank of America: Bullish Outlook at 5,000

• Bullish on the market due to the Federal Reserve’s successful monetary policy tightening.

• Positivity stems from companies adapting to higher rates and inflation, signaling confidence in the market’s resilience.

• RBC: Bullish with a Target of 5,000

• Acknowledges a potential pull-forward effect from the market’s strong November rally.

• Attributes expected gains to a continued decline in the inflation rate, emphasizing the historical resilience of the market during election years.

• Federated Hermes: Bullish at 5,000

• Forecasts a continued upward trend based on strong underlying market trends.

• Attributes bullishness to the Federal Reserve’s likely pause in interest rate hikes amid cooling inflation.

• Goldman Sachs: Bullish with a Revised Target of 5,100

• Revises upward from 4,700, citing falling inflation, rising corporate profits, and a dovish Fed.

• Swift change in projections reflects the Fed’s shift to a more accommodative stance as inflation moderates.

• Deutsche Bank and BMO: Bullish at 5,100

• Anticipates a soft landing for the US economy, driving positive stock market performance.

• Downplays potential economic recession impact on stocks, emphasizing tailwinds like falling inflation and interest rates.

Questions for you:

Will the January Effect Prevail?

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⏰Duration

• 10 Jan (24pm EDT)