Brian Shannon - Stock Market & Bitcoin Analysis December 27, 2024
Brian Shannon from Alphatrends.net analyzes recent market trends, highlighting the importance of moving averages in predicting market movements. He notes a slowdown in trading due to the holidays and a slight market pullback, except for oil. Shannon emphasizes the significance of the 5-day moving average, advising against using it on daily charts due to holiday-shortened weeks. He suggests using intraday charts for more accurate readings. Shannon discusses potential market recoveries and warns of possible deeper pullbacks in January. He highlights the importance of understanding market trends and being cautious with trades, especially in volatile sectors like biotech and energy. Shannon also discusses the potential for a deeper correction in Nvidia and Bitcoin, advising caution and defensive strategies.
Key Points:
- Use intraday charts for 5-day moving averages due to holiday-shortened weeks.
- Be cautious of potential deeper pullbacks in January after significant gains.
- Understand market trends and avoid being misled by rallies with declining moving averages.
- In volatile sectors like biotech and energy, be quick with trades and use defensive strategies.
- Nvidia and Bitcoin may face deeper corrections; monitor for lower highs and lows.
Details:
1. 📅 Market Overview & Holiday Trading Schedule
- The market schedule for the upcoming week includes a full trading day on Monday, a half day on Tuesday, and the market is closed on Wednesday, indicating a potential slowdown in trading activity and increased volatility due to reduced trading hours.
- Oil has been the weakest sector this year, showing a decline of 2.5%, which contrasts with the general market's minor pullback, offering potential opportunities for strategic repositioning.
- The S&P 500 recently approached the declining 20-day moving average and a prior support band, but has shown a gap lower, aligning with expected market behavior, which could signal bearish sentiment in the short term.
- The S&P 500 has hit the 5-day moving average and anchor points from the recent low and the Federal Reserve, suggesting a critical juncture that could determine future trends, as was predicted on Alphatrends and Twitter.
- There is potential for market recovery next week, though caution is advised due to the current position below the declining 5-day moving average. Traders should monitor these averages closely for signs of a trend reversal.
2. 📉 S&P 500: Current Trends & Forecast
- The 5-day moving average is adjusted due to a holiday-shortened week, being calculated over 4 and 1/2 days instead of 5.
- Upcoming adjustments will include a moving average based on 3 and 1/2 days plus 5 minutes, highlighting the importance of intraday data.
- Using the 5-day moving average on daily or exponential charts is discouraged as it may hinder performance, based on extensive experience.
- The S&P 500 faces a critical resistance level; surpassing it could lead to recovery, while failing might result in testing September lows or lower.
- Despite resistance challenges, the S&P 500 has gained 25% this year, mirroring last year's performance, indicating robust growth.
3. 📈 Nasdaq & Russell 2000: Patterns & Predictions
3.1. Nasdaq Market Trends & Predictions
3.2. Russell 2000 Market Trends & Predictions
3.3. Sector-Specific Insights
4. 💼 Financial & Energy Sectors: Challenges & Outlook
4.1. Financial Sector Insights
4.2. Energy Sector Insights
5. 📊 Nvidia & Bitcoin: Analysis of Market Movements
- Nvidia's stock price increased from $126 to $140, showing a significant upward trend.
- Potential resistance is identified at the anchor point from the election and the 50-day moving average.
- A declining 20-day moving average below the 50-day moving average indicates a possibility of a deeper correction.
- The pattern of lower highs and lower lows in the daily time frame suggests a bearish trend for Nvidia.
- If the current pattern continues, a further decline to the 200-day moving average is likely.