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. There are, however, a couple of reasons (besides the government's persistent aid to the stock market) to consider this might be the case.
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.
There are a couple of slight laggards whose participation which strengthen the bullish case.
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.
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