The Case for a Bullish 2024
The Case for a Bullish 2024
By:Tim Knight
After such a strong year for equities in 2023, it may seem odd to think that 2024 could pad those already healthy gains. What to expect in 2024?
- 2024 might pad 2023's gains.
- Presidential election years favor the stock market.
- Stock-market winners feel optimistic.
After such a strong year for equities in 2023, it may seem odd to think that 2024 could pad those already healthy gains. There are, however, a couple of reasons (besides the government's persistent aid to the stock market) to consider this might be the case.
- The presidential election year cycle tends to favor it. According to Merrill Lynch's research, the strongest year is the third (which we've just had) at an average of +13.46%, whereas the second strongest is the fourth (which will be 2024) that clocks in with an average of 7% gains. The second year, at 4.49%, and the first, at 3.96%, are the laggards.
- Lifetime highs tend to beget more lifetime highs. As the ancient saying goes, trees do not grow to the sky, but until they stop growing ... they do. Below are seven major U.S. indexes which are presently at lifetime highs, having soared particularly strongly in recent weeks.
Regarding that second point, the reason highs tend to lead to new highs is simple. Everyone participating in that financial instrument is already a winner and, thus, optimistic. There is no overhead supply to contend with. In other words, there are no prior buyers in a losing position who are eager to get out.
Added to this, the media (and featured tables in financial sections) draw attention toward new heights, which only adds to the excitement around a particular security or sector.
The Dow Jones U.S. Large-Cap Index ($DJUSL) is among the indexes at or near lifetime highs
The Dow 30 (INDU)
The tech-heavy NASDAQ 100 (NDX)
The S&P 100 (OEX)
The PHLX Semiconductor Sector Index (SOX), led by Nvidia (NVDA)
The NYSE Arca Major Market Index (XMI) has been especially strong
The NYSE Arca Securities Broker/Dealer Index (XBD)
There are a couple of slight laggards whose participation which strengthen the bullish case.
The Dow Transportation Index (TRAN) is not confirming the Industrial's recent record highs
The S&P 500 (SPX)
The S&P 500 has been powered almost entirely by The Magnificent Seven. The other493 components really need to start pulling their own oars.
This is not to say the market is cheap. On the contrary, the market is, in some respects —and tech stocks in particular–are valued by some metrics at levels much higher than the Internet bubble. One should also keep in mind that, as with early January 2022, sometimes markets can simply grind to an immediate hall for no clear-cut reason (except there are more sellers than buyers).
Until such time as the steady drumbeat of lifetime highs ceases, however, there is plenty of room for the bulls to be optimistic in the year ahead.
Tim Knight, a charting analyst with 35 years of trading experience, hosts Trading Charts, a tastylive segment airing Monday-Friday. He founded slopeofhope.com in 2005 and uses it as the basis of his technical charting and analysis. Knight authors The Technician column for Luckbox magazine.
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.