One area I cover in the Outlook 2024 is the teachings of Raymond Lo and how he sees the upcoming Year of the Dragon. Part of my comments on his analysis is based on this statement by Lo:
“Many has the misunderstanding that the Dragon is glamorous auspicious animal and will always bring good luck. To the contrary, Dragon and Dog in the 12-animal system is called the “Gate to Heaven and Hell” or the “Net of Heaven and Hell”.
Hence, 2024 could see gains. We are agnostic and definitely looking to charts, especially junk bonds, small caps and retail.
Interestingly, consumers and whether you call it revenge spending or YOLO, are still very much in the game. Disposable income is strong with certain areas of inflation coming down, although still higher than what numbers suggest. The discussion of the rate hike cycle at the end is controversial. Statistically, there has been a major financial failure at the end of each rate hike cycle since 1965.
Currently, the catalyst for financial stress could be the rising debt, rising spending, geopolitical issues impacting supply chain and a contentious election year. And anything that gooses inflation will stop the Fed from cutting.
January 2024 will see a new 6-month calendar range reset — it will be very important this time, with many predicting the end of the first quarter with a selloff. Although the stats are on the side of a higher market, this year of the dragon suggests some irritation that could turn the market on its side with more volatility.
Here are 17 Predictions:
If December SPY closes under 470, January and 460 is key and pivotal.If SPY just hangs in there and does not fail, the small caps and retail can shine. However, gravity always takes over if the sell-off is more severe.FED keeps rates between 4-6% and TLTs hold a range between 92-105 (unless there really is a recession).EVs will be the worst place to invest.Growth will go nowhere; not fail or rally, but more sideways.Alternative energy could make a comeback.Trends for 2024: gold and silver will start their last hurrah; we plan to ride the wave, exit and then move on.Industrial metals will do well.Bitcoin goes to 47k, then drops to 37k for the start of a new rally into the halving.Oil and NatGas are not worth trading for the time being.Consumers that spent the last ½ of 2023 in YOLO or revenge spending go into vanity mode 2024, as fashion, beauty, skin care, elective surgeries, self-help, maybe dating stocks do well — all about me!Banks could do well, but we need to see regional banks lead.We like Media stocks: ROKU, SPOTIFY, LYV.Infrastructure more through manufacturing and engineering, especially automation.Healthcare: We see big pharma putting more pressure on govt for medical cannabis use — ABBV top pick.Emerging Markets: GREK next leg up. Watching FXI and VNM.Commodities stay muted until the 2nd ½ of the year-why?a. Geopolitics — supply chain, labor issues, possible recession followed by more inflationb. Natural Disastersc. Debt and government spendingd. Dollar in a downtrende. Misstep by FED in reducing rates too fast or keeping rates flat while CPI picks upf. Election year: generally positive for stocks, esp. value.
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Mish in the Media
Mish discusses gold, silver and why self care and “all about me” can trend in 2024 in this video from Yahoo! Finance.
Coming Up:
December 27: Wrap up extended session, Benzinga
December 28: Singapore Breakfast Radio
January 2: The Final Bar with David Keller, StockCharts TV
January 5: Daily Briefing, Real Vision
Weekly: Business First AM, CMC Markets
ETF Summary
S&P 500 (SPY): 480 all-time highs, 465 underlying support.Russell 2000 (IWM): 200 pivotal.Dow (DIA): Needs to hold 370.Nasdaq (QQQ): 410 pivotal.Regional Banks (KRE): 47 support, 55 resistance.Semiconductors (SMH): 174 pivotal support to hold this month.Transportation (IYT): Needs to hold 250.Biotechnology (IBB): 130 pivotal support.Retail (XRT): The longer this stays over 70.00, the better!
Mish Schneider
MarketGauge.com
Director of Trading Research and Education