Market Insights: Analyzing Trends and Events Influencing 2025
The January Barometer: What Does History Suggest?
Markets can often be unpredictable. An old saying on Wall Street reminds us, “past performance does not guarantee future results.” While this is true, it doesn’t mean investors should ignore historical trends. In fact, successful investors use past data to inform their decisions.
The saying “So goes January, so goes the year” reflects a common belief among investors regarding the “January Barometer.” Jeffrey Hirsch, who wrote “The Stock Trader’s Almanac,” explores this concept and finds that gains in the first five days of January historically indicate overall annual performance. Hirsch reports that S&P gains in January’s initial five days preceded full year gains 83.3% of the time, and 14 out of the last 18 post-presidential election years have followed this pattern.
Honoring President Carter: A Day of Mourning
President Jimmy Carter, the 39th President of the United States, passed away at the age of 100. His presidency (1977-1981) had its highlights, such as the peace agreement between Israel and Egypt, and challenges like stagflation and an oil crisis.
In accordance with tradition, Wall Street equity markets will close on January 9 in memory of President Carter, as declared by President Joe Biden.
Analyzing Nasdaq: Market Sentiment and Price Trends
This year, “The Santa Claus Rally” did not yield results as anticipated. The Nasdaq 100 Index ETF (QQQ) saw a rise through much of 2024; however, it closed the year on a low note. Despite this downturn, two indicators suggest it may be premature to declare a market peak:
· Sentiment: The CNN Fear Indicator recently generated an “Extreme Fear” reading, which often indicates potential market reversals.
· Confluence Zone: The QQQ is currently testing a critical area between last week’s lows and the ascending 50-day moving average, highlighting its significance since it has remained above this average since September.
Image Source: TradingView
Bitcoin: Is Now the Right Time to Buy?
The year 2024 has been notable for Bitcoin, the largest cryptocurrency, which has more than doubled in value. After surpassing $100,000 in December, it has recently retreated to around the $90k mark. Despite this pullback, both Bitcoin and the iShares Bitcoin ETF (IBIT) are approaching the 10-week moving average, presenting a potential support point following the strong breakout in September.
Image Source: TradingView
Identifying Strong Stocks Amid Market Declines
While some investors may feel discouraged during bearish market conditions, experienced investors find opportunities in such times. A downturn can reveal stocks with relative strength, as these stocks often resist market pressures better than others. For instance, if a company can weather a significant slump, it is likely to become a leader once the market stabilizes.
Stocks like BigBear.ai (BBAI), GameStop (GME), Nvidia (NVDA), and Rubrik (RBRK) have shown resilience amidst the recent market turbulence.
Bottom Line
As 2024 draws to a close, market indicators suggest January may provide critical insights into the trends expected for 2025.
Expert Recommendations for Future Investments
A group of Zacks experts has identified five stocks with the potential to rise by 100% or more in the coming months. Among these, Director of Research Sheraz Mian has selected one company that shows exceptional promise.
This particular company focuses on Millennials and Gen Z, generating nearly $1 billion in revenue last quarter. Given its recent price correction, this could be an opportune time to invest. While past recommendations have had their successes, like Nano-X Imaging’s impressive 129.6% gains in just over nine months, this stock stands out for its growth potential.
Find Out Our Top Stock and More
Get the latest recommendations from Zacks Investment Research for free: 5 Stocks Set to Double
NVIDIA Corporation (NVDA): Free Stock Analysis Report
GameStop Corp. (GME): Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
BigBear.ai Holdings, Inc. (BBAI): Free Stock Analysis Report
Rubrik, Inc. (RBRK): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.