As we wrap up the first month of 2024, it’s a good time to reflect on the market’s performance. After a turbulent 2023, the market seems to be on an upward trajectory. The burning question on every trader’s mind: Where will stock market goes in 2024? What lies ahead for the stock market in 2024?
Review Of My Article Last Year In 2023
Let’s take a moment to revisit my article from last year, “Where Will the Stock Market Go in 2023?” In that piece, I drew insights from Jay Kaeppel’s studies, predicting a volatile year ahead. I leaned towards shorter trades, and it paid off. My portfolio was up 34.2% by the end of 2023 (vs SPX growth of 24.7%)
In this post, I’m revisiting those same studies to gauge the market’s direction for 2024 and where will stock market goes in 2024. This is the 3rd year I am doing this and it is serving me well. Remember, this isn’t financial advice. It’s simply a glimpse into my own trading journey and the tools I use to navigate the markets.
How Did First Month of 2024 Goes?
Let’s have a look at the chart from TradingView. Below is what the first month of 2024 for S&P 500 (SPX). It ended higher which is a good sign. I’ll explain in the next section.
Where Will Stock Market Goes in 2024?
This books identified 13 different trends based on studies spanning over past 70 years in the market. It is definitely a good reference to use. But do treat it as a reference only. You should still do your own further analysis.
With that said, I use the following trends within that book. Do refer to it if you want more details of the other trends.
Trend 1 – Jay Newary Barometer Based on January Market Performance
For this trend, Jay used the performance of the market in January to gauge the probability of a bull market for rest of the year. This barometer has a success rate of 71.4% for getting the market direction correct.
For this analysis, I extracted out the following close price for SPX (based on the chart which I attached above):
2 Jan 2024 – Closed at 4,742 (1st trading day)
8 Jan 2024 – Closed at 4,763 (5th trading day)
25 Jan 2024 – Closed at 4,894 (last 5th trading day in January)
31 Jan 2024 – Closed at 4,845 (last trading day in January)
This barometer looks at the following 3 key parameters:
1. Performance of market in first 5 trading day of January.
In 2024, this shows an up signal.2. Performance of market in last 5 trading day of January.
In 2024, this shows a down signal.3 Performance of market in January as a whole
In 2024, this shows a up signal.
Based on Jay’s analysis of past years using this trend, there is a 91% probability of the market will end up higher by end of 2024. This is the first encouraging sign.
Trend 2 – Yearly Seasonal Trends
Based on the studies from 1900 to 2007, on average past similar years with year number ending with 4 tends to have:
Average annual gain of 7.8%
Market tend to go up (100% of the sample size in this study)
This is the second encouraging sign.
Trend 3 – Election Cycle
This year is United States Election year.
Based on Jay’s studies (covered in details in his book), 72.2% of the years ended up for the stock market.
The best period to trade in the stock market was found to be from 1 June to 31 December of the election year.
This is the third encouraging sign though with cautious.
Observation 4 – SPX Performance in Jan 2024
Let’s dive into the technical indicators from the last trading day in Jan 2024. The market closed above the SMA 50, SMA 150, and SMA 200. Even better, the SMA 50 is positioned above the SMA 150, and the SMA 150 sits above the SMA 200, all trending upwards.
What does this mean? Well, it’s a clear signal of an uptrend both in the short and long term. That’s the fourth encouraging sign we’ve seen lately.
In Summary On Where Will Stock Market Goes In 2024?
With reference to the above trends and observations, there is a high probability of stock marketing ending up this year. Do note that market don’t go up in a straight line. It will retrace before bouncing back up again.
Having said that, I am more optimistic trading LONG position this year. Let’s go for it.
To Your Trading Success,
Keith Choy
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