With the year 2023 closed in which “everything rose” except for “commodities” (DBC), and the corresponding year-end balances have been made, the question now focuses on how to approach this new stock market year. Will the same dynamic continue? Are we still in technology stocks? Is fixed income the winning bet? Will the gold continue to shine? Will bitcoin respond to the expectations created?
As investors we must understand that it is about establishing a correct strategy, appropriate to our objectives and being able to react to price movements without trying to "guess" any movement. The underlying trend continues to be bullish in equities, gold and bitcoin, but as we said, the only way to be able to operate correctly will be to define the relevant exit levels and avoid falling into the euphoric movements that the masses make.
As a first clue we must observe the flows. Specifically, and as we have been analyzing in the past, money market funds closed the year on a positive note and brought total assets close to all-time highs, reaching USD 5.88 trillion. During the year 2023, US funds received 1.15 trillion USD. Inflows accelerated after the regional banking drama in March and continued largely unabated for the rest of the year.
In this sense, the fate of those trillions of dollars parked in currencies is an important question as the year 2024 begins. Some believe that currencies can be a source of funds for a continuation of the rise in risk assets. Others argue that historically, outflows from these assets typically occur about a year after the first Fed cut. There is concern about the possible effects derived from a possible massive outflow of these funds. For now, we will continue analyzing them to understand their fate.
The second clue will come via elections. In 2024, major presidential elections will be held in several countries:
United States: The presidential election will be held on November 5, with primaries and caucuses beginning in January.
Mexico: Elections will take place on June 2, including voting for president.
Russia: The presidential election is scheduled for March 15-17. In case of a second round, it will be held on April 7. Portugal will also have elections in the first part of the year. Statistically, stocks don't usually do badly in election years.
The third clue comes from the business results side. With an SP500 trading at 20 times and a risk premium over fixed income that does not invite risk-taking, the expansion of multiples can only be justified via an increase in business results. While a recovery in corporate earnings is forecast for 2024, there are significant challenges related to inflation and interest rates that could have a significant impact. In addition, political uncertainty, especially around the presidential elections, could influence the economic outlook.
We have to see the fourth clue at the technical levels. More than ever, it will be necessary to respond correctly to price movements and be clear about the areas of control and resistance to be able to react to price movements.
Key technical levels for the week
THEY ARE NOT INVESTMENT RECOMMENDATIONS. Only comments from a technical informative point of view.
1.- S&P
From a technical point of view, the first control zone is delimited by 4770-4780 points. If the previous zone is surpassed, the market will enter the zone of all-time highs and the objective may be about 100 points above. Below, 4600 marks the first support level and losing 4540 would raise doubts about future movements.
Source: investing.com
IBEX-35
From a technical point of view, the Ibex continues to consolidate the strong previous movements. If the 10,000 points hold, we can move on to narrower movements with a resistance zone at 10250. The weakness and exhaustion of sectors such as banking will be key when it comes to accentuating one movement or another. The previous high level of overbought has been corrected and serious inflows will now be needed to continue thinking about new increases.
Source: investing.com
3.- BITCOIN (BTC)
From a technical point of view, we continue in the consolidation movement limited by 40,000 and 44,000USD. Before January 10 we must know the SEC's resolution on the #BlackRock ETF and all those who are waiting. We think that approval is 99.9% assured and that the movement seen in 2023 corresponds to the discount of said news.
Technically, breaking above 44,000 means going for 48,000-50,000USD. Below, target at 36,000USD first and 31,500 #USD $USDC as the next important reference.
SOURCE: Territorioblockchain.com
