Market Levels: What we Expect

I'm following up with the first post from last week with further specifics of where we see this market headed.  Obviously, the answer is "No one knows".  But we take pride in what the technical picture tells us from an investor psychology perspective.  This is what we use to make portfolio decision to correspond to the data we see from the macro level.

Photo courtesy of Stock Charts

The red trend line showing a straight decline in the Dow Jones Industrial Average ("The Dow") since early December 2024 was reversed on January 15th with an up move after tame inflation news.  As stated, rates and inflation are our big drivers.  With the news, rates dropped swiftly after reaching about 4.8% on the 10 year.  So what level might we expect in the coming weeks?

Our opinion is based on this drop and reversal is we might see this up move progress a little bit further but without exceeding the previous all time high price point.  We would then see another move lower towards the yellow rectangle area to complete and overall correction that began in December.  If we hit this area, we reevaluate  whether that would be the end, or if this is the near term bottom.

For now, we are looking to see how this up wave could progress and would consider selling certain positions if warranted.  

As you know, the market is always fluid. So we watch this daily and make our assessment updates as we see them!  Overall, we think this is a good and necessary decline that gives fuel for gains in 2025.  The year is set up to continue this type of 'volatility', so strap yourself in and hang in there!

Author: Steve Economopoulos

Published: 1/17/2025