The market ended 2024 on a weak note Tuesday and started the New Year off in similar fashion on Thursday, with the NASDAQ Composite and S&P 500 posting five straight down days before rallying on Friday. Note that both indexes posted mini-U&Rs along the lows of two weeks ago with the NASDAQ also posting a moving average U&R at its 50-dma. Thus Friday's oversold rally was logical from a technical standpoint, but it is not clear how far these moves will carry as we move past the general Christmas/New Year's holiday period.
Meanwhile, the less tech-centric market indexes, the
Dow,
NYSE Composite, and small-cap
Russell 2000 all remain within bear flags after peaking in late November and then declining December. The action over the past two weeks has been more typical of a bear flag as these indexes consolidate the prior initial leg down off the late November/early December highs. We remain cautions on stocks for now.
Bitcoin ($BTCUSD) continues to consolidate below the $100k level. We can see that the breach of 50-dma support was not a serious negative for $BTCUSD since, as we wrote last weekend as it dipped below the 50-dma, "We would not draw firm conclusions either way, however, since price support can hold up better than moving average support where the moving average is rising sharply as it catches up with $BTCUSD's big move in November."
And in fact what we see is that $BTCUSD did in fact hold price support as it shook out along two prior lows in the pattern at $91,741.97 and $92,144.03, respectively, before ending the week on Friday above 50-dma support. We noted last week, we would look for continued consolidation as the market awaits concrete legislative proposals from the incoming Trump Administration.
The Market Direction Model (MDM) switched to a CASH/NEUTRAL signal on Thursday, January 2, 2025.
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