Within the Dow Jones Industrial Common (DJIA) and S&P 500, near-term resistance exists inside bullish worth channels, as adverse A/D Line divergences are resolved. The bulls stay in management, however we’re looking forward to indicators that the post-election market motion alerts the start of a transition to a choppier 2025. Giant-, mid-, and small-cap proxies didn’t come near filling the upside hole created by the election outcomes, nor did they break beneath their latest topside breakout ranges and ranges. I view this as supportive (bullish) within the close to time period. It additionally means that the latest low serves as the primary stage of short-term assist.
DJIA and S&P 500 (day by day bars). Quick-term resistance remains to be in place. When coupled
with excessive ranges of “Extreme Optimism”, bouts of profit-taking shouldn’t be shocking. Thoughts the gaps.
Have equities introduced ahead the traditionally bullish returns of the fourth quarter following elections? Are we prone to such an incidence? Whereas I nonetheless imagine there will probably be situations of profit-taking as we strategy year-end, I think about seasonal charts to be secondary; they don’t seem to be as vital as major indicators and fashions.
The Dow Industrials’ 4-Yr Presidential Cycle suggests a uneven begin to 2025, with weak spot within the latter a part of the
first presidential yr extending into the second yr—an outlook that has not been broadly mentioned on Wall Road.
The bull market usually continues into the primary yr after an election, however the first two years are usually rocky. Many bear markets start within the first yr and persist into the midterm election yr, as seen with the bear market that began in 2021 and continued into 2022. Subsequently, trying forward, prudence suggests adopting an funding technique that objectively manages danger.
