The NQ at almost +40% for the year has seen a disproportionate rise compared to the other indices, Just the inclusion of "AI" in a company's name or in its reporting has added perceived value to the company. in my opinion, this is mostly hype. LLMs, the likes of ChatGPT, are in essence search engines that have pre-searched all available data. IMO the current AI hype is quite unjustified as it is unlikely to make much difference to a company's bottom line. The day AI can give opinions and predictions based on projected future technology, then we can call it real AI and could position companies that use it at an advantage... that day is not today.
Trading the Indices on Fundamentals
- Thread starter FXtrader8911
- Start date
Since the 27 May post markets have had quite a rally, however my view remains that they are overvalued, this is based on the AI enthusiasm in revenue increases being overestimated and due to further rate rises pending with no probability of a cut this year. If the correction does materialize it should not be excessively deep because despite the rallies, all US indices still have not reached the ATHs seen in Jan 2022, to put things in perspective, these are the standings...
DOW 7% from ATH
RUS 23% from ATH
SPX 8% from ATH
NQ 10% from ATH
Interestingly, most EU majors did reach their ATH a month or two ago and have since sold-off.
DOW 7% from ATH
RUS 23% from ATH
SPX 8% from ATH
NQ 10% from ATH
Interestingly, most EU majors did reach their ATH a month or two ago and have since sold-off.
Further to above, the Buffett indicator is at +166% which is significantly over the historical average. The indication is that anyone buying securities at current value is likely to end the year at a loss, however, many technicians are predicting ending the year at +4% to +8% from current values... this is not my view.
I am currently net Short on the DOW & SPX, but net long on the RUSSEL, with no positions on the NQ100 but with buy orders at 500pts below the current level of 15,158.
I am currently net Short on the DOW & SPX, but net long on the RUSSEL, with no positions on the NQ100 but with buy orders at 500pts below the current level of 15,158.
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SPX Hits 200 day AVR, Only NQ remains above the 200 day average. DOW & RUSSEL loses all of 2023 gains
My view is that markets might have reached the bottom in this round of sell-offs despite increasing talk of recession. Players are now looking to selectively buy at these levels as reporting mostly beats expectations. Markets also think the FED is done and have come to terms that there will be no rate cut for some time i.e. Higher for longer is an accepted stance and the high is not as high as originally anticipated.
The Buffett indicator has fallen to 156% indicating an average positive return by year-end on the SPX500 (from the current 4,220).
Some experts are predicting that the NIK225 is on the way to its ATH, I am not convinced and have no positions in the NIK225
I took profit on my RUSSEL Shorts so I am currently long on all US Indices as well as on the FTSE
A temporary kneejerk selloff might occur if the M.E. conflict escalates
The Buffett indicator has fallen to 156% indicating an average positive return by year-end on the SPX500 (from the current 4,220).
Some experts are predicting that the NIK225 is on the way to its ATH, I am not convinced and have no positions in the NIK225
I took profit on my RUSSEL Shorts so I am currently long on all US Indices as well as on the FTSE
A temporary kneejerk selloff might occur if the M.E. conflict escalates
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Wed 13th Dec, Monster rally after Powell indicated rate cuts in March 2024 probability. DOW made a new ATH. However not all indicators are pointing to continued rallies beyond the Santa surge, in particular, the VIX futures gap has widened to 2.6, which is 1.2 full units from the average of a 1.4 units gap, this is indicating that players who are looking further ahead than just the day's euphoria think that a rate cut, although good for markets, is bad news for the economy. Further, the Buffett indicator has jumped to 170% from the historical 140% average also indicating a mismatch between market multiples and expected GDP.
I have used today's rally to exit and t/p on all US long except the Russell. I'm Currently holding RUS & FTSE Longs with t/p orders at 1.5% above current levels and also have Short orders at +1.8% to 2.5% above today's closing prices.
I have used today's rally to exit and t/p on all US long except the Russell. I'm Currently holding RUS & FTSE Longs with t/p orders at 1.5% above current levels and also have Short orders at +1.8% to 2.5% above today's closing prices.
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Well, all indicators are useful, it all depends on your time horizon. Indicators that reflect sentiment are critical for day trading and in setting entry/exit levels for that type of tradeing, while those that measure performance Vs. the economy, like the Beffet indicator, are very useful in trading the fundamentals and particularly in managing risk. Most of my entry trades are based on fundamentals while I'll often use indicators that track sentiment to close positions as sentiment is what causes markets to overshoot... overshot prices are what give some exit opportunities that the fundamentals won't predict. One thing that amuses me is trades based on the Fibonacci levels.
Fantastic Four is the new Magnificent Seven for 2024
In Jan 2024 the spotlight is shifting to four exceptional performers
2023 saw the S&P 500 go up 36% from September 2022 lows this was not generally expected and can be attributed to the Magnificent Seven which represented 60% of that performance.
Alphabet (+68% YTD),
Amazon (+60% YTD),
Apple (+50% YTD),
Meta (+196% YTD),
Microsoft (+77% YTD),
Nvidia (+303% YTD)
Tesla (+70% YTD)
These have collectively risen nearly 117%, far outpacing the performance of the other 493 companies in the S&P 500
Tesla is to be watched, Musk already threatened to take new innovations away from Tesla if he did not own 25% of the company and that was before the courts reversed his $55b share package. The board is now under increased pressure to appease Musk, if they don’t, a $60 Tesla is possible.
In Jan 2024 the spotlight is shifting to four exceptional performers
2023 saw the S&P 500 go up 36% from September 2022 lows this was not generally expected and can be attributed to the Magnificent Seven which represented 60% of that performance.
Alphabet (+68% YTD),
Amazon (+60% YTD),
Apple (+50% YTD),
Meta (+196% YTD),
Microsoft (+77% YTD),
Nvidia (+303% YTD)
Tesla (+70% YTD)
These have collectively risen nearly 117%, far outpacing the performance of the other 493 companies in the S&P 500
Tesla is to be watched, Musk already threatened to take new innovations away from Tesla if he did not own 25% of the company and that was before the courts reversed his $55b share package. The board is now under increased pressure to appease Musk, if they don’t, a $60 Tesla is possible.
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Most players admit having got it wrong in 2023, it was indeed a difficult year to read with most players predicting a correction due to the rate heights but markets remaining resilient instead. The resistance is continuing in 2024 so the general consensus is that US Markets are due for a mild correction (under 10%) and that this will be a buying opportunity as the year-end SPX500 target is 5,400. The Buffett indicator now stands at 184% which is some 25% above the long-term average indicating US Markets are overvalued, however, GDP is expected to grow bringing the indicator down to fair value by year end.
The Star of 2024 (so far) is Europe and Japan. Japan broke its ATH set over 30 years ago and the DAX, CAC and MIB are breaking their ATH almost every day. The FTSE is lagging behind the STOXX50 but has had a good run this week.
I took profit on all my US Long positions last week and have new buy limit orders starting at -4% from recent ATH progressively increasing in amount to -7%.
The Star of 2024 (so far) is Europe and Japan. Japan broke its ATH set over 30 years ago and the DAX, CAC and MIB are breaking their ATH almost every day. The FTSE is lagging behind the STOXX50 but has had a good run this week.
I took profit on all my US Long positions last week and have new buy limit orders starting at -4% from recent ATH progressively increasing in amount to -7%.