Market Milestones: New Year, Same Stocks

Happy New Year!

The bulls have established a rock-solid support level on SPY at the low of the November 5th Trump election candle, around $585.00. However, my current thesis is that this support is on borrowed time, and the bears may soon break through it. Keep “Wrecking Ball” by Miley Cyrus queued up and ready to go over the next couple of weeks. SPY isn’t the only chart with this set up; Bitcoin has also been clinging to its $92,000 support level with a similar head-and-shoulders pattern looming above. The parallels between these two charts are striking, and while a false breakdown could ignite a sharp squeeze higher for both Bitcoin and the broader markets, that isn’t my primary scenario given the current market conditions.

While I anticipate lower prices across the markets in the coming weeks, I view these as potential buying opportunities rather than the start of a more significant bearish trend. If SPY were to gap below its 100-day SMA, completing a head-and-shoulders pattern and creating an island reversal and then following through and breaking key support levels at $565.00 and $555.55, my outlook would shift toward a more bearish scenario. However, as long as SPY holds the 200-day SMA during any pullback, we could see a strong bullish move to kick off 2025.

SPY

The DIA is consolidating after a steep sell off, with a bear flag potentially setting the stage for a move lower toward the 200-day SMA. Meanwhile, the IWM breached its support and trendline as of 12/18/24 and has struggled to regain any bullish momentum. The only ETF that we track with a relatively bullish setup is SMH, which recently broke out of a six-month triangle and is now retesting its breakout level. As long as SMH holds its long-term moving averages, it remains a promising bullish setup.

SMH

This week, NVDA, the second-largest company in the world, hit a new all-time high before printing a colossal bearish engulfing candle. Nvidia has been a key driver of market gains over the past two years, making it a critical stock to monitor. Its leadership in the market is likely to persist, and we aim to capitalize on its continued outperformance over the next several years as we layer into it on dips.

NVDA

MSFT, the third-largest company in the world, broke out of a six-month triangle, much like SMH, but has since failed that breakout and reverted to its prior range. It’s currently sitting at its daily long-term moving averages and the apex of its triangle pattern. If MSFT breaks down from its triangle, it will exert bearish pressure on the market. If further bearish pressure pushes MSFT down to $388.00, the August low, or even the 100-week SMA at $375.00, these areas could offer excellent risk-reward opportunities to the upside.

MSFT

AMD has been punishing bulls for an entire year, plummeting nearly 50% from its highs last February. However, it’s always darkest before the dawn, and I’m about to camp out, watching the eastern horizon for those gleaming golden sun rays to finally shine through. For the first time ever, AMD has surpassed Intel in data center revenue and remains a significant player in the A.I. revolution.

The stock is now just 6% away from its 200-week SMA, and if it makes another low to reach that level, it’s likely to occur with bullish divergence on the daily RSI. Coupled with strong horizontal support at $110, AMD is shaping up to be one of my favorite setups heading into 2025.

Earnings are 26 days away, so it’s crucial to plan for protection over the event. We are rolling out a HODL Heroes play on this stock, with details coming Monday—don’t miss it!

AMD

I believe we are approaching the pullback we've been anticipating for months. It may take a few weeks to materialize and there's a possibility we see another lower high before the main drawdown arrives, but I am waiting for lower prices. Given the current setup, the next leg down could be swift and violent, potentially ending before I have another chance to say “buy the dip.”

That said, the market has recently had a way of making me feel like the boy who cried “dip,” so perhaps fading this call is the play for the ultra-bulls out there.