As we step into 2025, it’s time to assess the market’s trajectory and what lies ahead. After a strong 2024, fueled by resilient corporate earnings, shifting monetary policies and US Election, investors are once again asking the big question: Where will the stock market go in 2025?

[Note: This blog is shared only for educational purposes. Not investment or trading advice.] 

Looking Back at My 2024 Market Outlook

Last year, in my post Where Will the Stock Market Go in 2024?”, I built on insights from Jay Kaeppel’s studies, anticipating continued volatility but also opportunities for strong gains. That approach proved effective—my portfolio ended 2024 with a solid return of 47.97% (vs. the S&P 500’s 26.5%).

Below is my IBKR account performance vs S&P 500.

Where Will Stock Market Goes In 2025 vs my performance in 2024

What’s Next?

For the fourth year in a row, I’m revisiting these studies to gauge where the market might be heading in 2025. This method has helped me navigate shifting market conditions, and I’m excited to see what this year brings. Of course, this isn’t financial advice—just a personal take on the trends shaping the markets and my own trading strategy. Let’s dive in.

How Did First Month of 2025 Go?

Let’s have a look at the chart from TradingView.  Below is how January 2025 for S&P 500 (SPX) perform.  It ended higher which is a good sign.   I’ll explain in the next section.

Performance of S&P 500 in Jan 2025

 

Where Will Stock Market Go In 2025?

At the start of each year, I turn to Seasonal Stock Market Trends by Jay Kaeppel, a book that analyzes historical market patterns over the past 70+ years. It identifies 13 different trends that provide insights into where the stock market might be headed.

While no single method guarantees success, these trends serve as a valuable reference. I encourage you to use them as a guide while also conducting your own research and analysis.

This year, I’ve focused on three key trends that give us clues about how the stock market may perform in 2025. Let’s dive in.

 

Trend 1 – The January Barometer

This trend evaluates market performance in January to predict the year’s direction. Historically, this method has a 71.4% success rate in determining whether the market will end the year higher or lower.

For 2025, here are the key data points for the S&P 500 (SPX):

  • Jan 2, 2025: Closed at 5,868 (First trading day)
  • Jan 8, 2025: Closed at 5,918 (Fifth trading day)
  • Jan 27, 2025: Closed at 6,012 (Last fifth trading day of January)
  • Jan 31, 2025: Closed at 6,040 (Last trading day of January)

This barometer examines three signals:

First 5 trading days: Market was up → Bullish signal
Last 5 trading days of January: Market was up → Bullish signal
Full month of January: Market was up → Bullish signal

👉 Based on historical data, this suggests a 92% probability that the market will end 2025 higher.  This is the first encouraging sign.

 

Trend 2 – Yearly Seasonal Trends

Looking at market data from 1900 to 2007, years ending in “5” (e.g., 2005, 1995, 1985) have shown strong performance:

📈 Average annual gain: 31.4%
📊 Winning percentage: 100% (Every “5” year in the study had positive gains)

👉 This is our second encouraging sign for a strong market in 2025.

 

Trend 3 – U.S. Election Cycle

2025 is the first year after a U.S. presidential election, which historically has mixed results:

📊 44.4% of these years ended positive
⚠️ Key Risk Factor: Donald Trump’s policy shifts, including tariffs and economic strategies, could introduce significant market volatility.

👉 This is a wildcard trend. Unlike the first two trends, this one suggests a more uncertain market, requiring careful monitoring and quick reactions.

 

Observation 4 – SPX Performance in January 2025

Now, let’s look at technical analysis for additional confirmation. As of Jan 31, 2025, the market closed:

Above SMA50, SMA150, and SMA200 (indicating strength)
SMA50 above SMA150, SMA150 above SMA200 (classic uptrend pattern)
All three moving averages trending upwards (bullish confirmation)

👉 This reinforces the bullish outlook—yet another encouraging sign!

 

Final Thoughts: What Does This Mean for 2025?

🔹 2 out of 3 trends are bullish, pointing to a strong market this year.
🔹 The U.S. election cycle adds uncertainty, meaning flexibility and risk management will be key.
🔹 Technical indicators confirm an uptrend, providing additional confidence.

While history doesn’t guarantee the future, these insights help set expectations. As always, stay informed, adapt to market conditions, and make strategic decisions.

To Your Trading Success,
Keith Choy

💡 What’s your take on the market for 2025? Let’s discuss in the comments!

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