“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” —George Soros
A huge week ahead in markets! The market is trading exactly where I mentioned it would be in last week's article, attached below.
Trade Update 1/21/2025
"The idea behind hedging is not to make money; it's to ensure survival and limit losses."
Entering this week, 15% of the S&P 500 has reported Q4 earnings, with 60% of companies beating the street consensus by at least 1 SD vs. the historical average of 46%. This week, 41% of the S&P 500’s market cap reports, including META and MSFT, will be on Wednesday, and AAPL will be on Thursday. AAPL is entering its earnings in oversold territory, giving it a clean upside setup if earnings don’t disappoint.
I’m Still optimistic for Equities into Q1, and I stated why in the article below. In today’s article, I will update my reasoning for staying long.
I want to point out that The S&P 500 rally since the US election is in line with those seen after nearly every close Presidential election, historically reflecting the dissipation of event risk premium rather than policy changes. It has underperformed the rally since the 2020 election, which I believe is why the market will play catchup post-FOMC on Wednesday. The S&P 500 has also stayed firmly within the tight, steep trend channel in place for over 2 years now with no discernible shift in the trajectory. Looking over a longer horizon, it is exactly in the middle of its post-GFC trend channel in place for the last 15 years…
Great charts from DB:
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