To The Moon

The first trading day of 2025 has indeed set the stage for the year's market performance, with historical data suggesting that January's performance can be somewhat of a bellwether for the year's overall trajectory. Here's my take on whether the market will kick off with a winning start:

Judgment on the Market Direction for the First Trading Day:

• Market Likely to Open Higher: Early indicators from futures trading suggest a slightly positive start to the year, with Dow futures up by 67 points, S&P 500 futures by 0.2%, and Nasdaq futures by 0.66%. This aligns with the sentiment of a continued bullish trend from 2024 into 2025.

• Potential for a Cautious Opening: However, there are notes of caution. Global cues are not overwhelmingly strong, and with several major markets closed for New Year celebrations, there might not be the usual momentum to drive an aggressive upward trend. This could lead to a more conservative or even bearish tone at the open, particularly if there's a lack of positive news to fuel optimism.

Chart - Nasdaq 100 Futures

Reasoning:

• Historical Context: The "January Effect" suggests that a positive January can set an optimistic tone for the year. However, this isn't a foolproof indicator. The market has seen both false starts and recoveries from poor starts in past years.

• Recent Performance: Coming off a year where major indices like the S&P 500 ( $.SPX(.SPX)$ ), Nasdaq ( $NASDAQ 100(NDX)$ ), and Dow saw ( $.DJI(.DJI)$ ) significant gains (23%, 29%, and 13% respectively in 2024), there's a natural expectation for some profit-taking, which could temper enthusiasm on the first trading day.

• Contrarian Indicators: There are hints that the market might be overbought, with some analysts like Ed Yardeni suggesting that contrarian indicators might be turning bearish, indicating a possible pullback at the start of the new year.

• Current Sentiment: Posts on X.com indicate mixed responses. While some markets like India's Sensex and Nifty showed gains, there's also a mention of a potentially bearish start due to global cues, suggesting that the market might not be unanimous in its direction.

Conclusion:

While there are signals for a positive opening based on futures, the market might not sustain this upward trend throughout the day. I predict a cautious to slightly positive start, with the real test being how the market closes. If it manages to close up, it could indeed set a confident tone for the rest of January and potentially the year. However, if we see a downturn by the end of the day, it might reflect the broader market's hesitance to fully commit to a bullish stance right from the start.

Remember, the first day is just one piece of a much larger puzzle. The market's trajectory throughout January and beyond will give us a clearer picture of what 2025 holds.

@TigerWire