Thursday December 26th – Year End Buying or Selling?

With only a half day of trading on Tuesday, nothing has really changed with the markets, but they are lining up for a selloff in my opinion, so let’s discuss that.

We have 2 days of trading left in this week, and 4 days of trading left in 2024. Some people do not want to sell, so they don’t have to pay taxes on this years gains yet. Others sell to get tax losses off the books, and some sell winners and losers to offset the gains. We’ll see how the next couple of days goes, but in the bigger picture I do expect selling soon.

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SPX – So with 2 days left in this week and 4 days left in 2024, we could see this year end rally continue, but what about January 2025?

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SPX – Day 30 of this daily cycle will be next Tuesday, so it is quite possible that if this year end rally continued, it could peak around that day 30 area and we’d experience a new year sell off.

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THE NASDAQ reversed above the 50sma and is having that year end rally, but I do see divergence and the markets are coming due for an ICL correction.  ICLs come ‘roughly’ every 6 months, and the last one was seen in August.

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THE SOXX is having a fairly strong looking rally this week, but it has been back testing that 200sma and that could be where it peaks before selling off too.

 

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A drop from here that eventually leads to an ICL sell off could give us a great buying opportunity in late January or February of 2025. That is why I pointed out some strong stocks in my last report. I mentioned that I’ll be keeping a watch list of these stocks listed below (& more) as these pull back and look for opportunities to enter at a lower price and possibly a support area.

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TAKE A GOOD LOOK AT LMND – This ran from a huge base that chopped for over a year. It ran straight up from $15 to $54, but it has started to chop lower already. It is almost at the 50sma and may just chop around that area during a market sell off, but what if it continues to the 200sma? That is a back test of the base and what a great opportunity that may be in the $25 area.

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In Tuesdays report I also mentioned the following stocks

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RKLB – With a multiweek correction into an ICL, you may gradually see an Inverse H&S form on many stocks.

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AAOI  is one that I have traded as it ran from the $7 area to $45 since August. It started its correction recently and  it dropped to the 34 sma. This is a good one to find at an ICL and see where it landed. It may just put in a box consolidation up at this level.

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AAOI  is still acting bullishly into the end of 2024 too.

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RBOT ran $5 to almost $20 and then dropped to $12. This actually becomes a buy at support at the half cycle low, and then when an ICL comes, we can look and see where this ended up. The ‘Robotics’ stocks had a great run in 2024.

 

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RR – This doesn’t look like a big move yet—but it was.  This pop for yesterday alone was 54%! I’m pointing it out as a buy the dip and massive base that is starting to form the right side.

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SERV is also a robotics stock, and recently it dipped down and recovered. This ran from $8 to $18 recently. If you look at the price range in the recent chop, this would be very hard to ride, but it is making good gains.

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GOLD – When the general markets sell off, it is also possible that Gold, Silver, and other commodities that have already been selling off begin to move higher. I have already been discussing that it looks like we have an ICL in place. Now I’m seeing Gold start to look like it is forming a large triangle.

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This was in Tuesdays report:

SILVER has 4 clear daily cycles and is back testing a trendline. Do we see a 5th daily cycle or is this an ICL as an A-B-C down? Time will tell, you can buy these reversals at the lows and use a stop if you wish.

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SILVER is due for an ICL and it may already have the lows in place at 5 months, or we could get 1 more daily cycle to give us 6 months.

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GDX sold off sharply to the 200sma, bounced to the 50sma and has now broken below that 200sma. This selling may be done, especially if Gold has an ICL in place, but even if it sells off a bit more, I think that the next rally will be a good one. GDX has been very choppy when you look at 2024, but the gains overall where great from February to October. 

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AS WE WAIT FOR THE LOWS WITH THE MINERS, I POSTED THIS THOUGHT BELOW:

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I just wanted to point out that many Miners are still at their recent lows, so we haven’t missed getting into Miners before they rally higher. That said, most of those strong leaders that we’ve followed are actually in a sideways consolidation, but holding up rather well. Let’s take a quick look…

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EGO and some of the other Miners have chopped sideways for months. A long consolidation at the highs can lead to a great run later. EGO could be a shake out here if we have an ICL, but it needs to recover soon to have a shake out.

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HMY has also chopped sideways for 8 months!  It has had rallies, but they have been selling off. This does look like the buy area of support in this consolidation, but it actually hit a new recent low Monday.

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 Even if KGC had a H&S pattern that plays out, the drop isn’t measured as very deep. We could see a drop and a break of the 200sma at the ICL.

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So now that we have passed Christmas, we have 4 trading days left in 2024.  Will the rally continue, or will we see year end selling?  Well, sometimes you’ll see some year-end selling, often that is what is called ‘tax loss selling’. People want to sell their losers to claim the loss on their taxes for this year. The ‘buy & hold’ crowd should have gains in 2025 however, so at other times we see the opposite year end result. We see that people do not sell into the year-end, so they don’t have to pay taxes on their gains this year. We’ll just have to wait and see if the Rally continues or fades as we finish off 2024. Enjoy your Thursday trading!

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~ALEX

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 This was Bitcoin on Tuesday.  We had a day 46 low, but usually we see a low around day 60, so it becomes likely that Bitcoin could just continue to chop at the lows for several more days to reach a low closer to day 60 . On Tuesday I said in part …

A low is due 10 days from now.  (Reminder: Bitcoin has no holidays or weekends, so the count continues quickly)

 

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 BITCOIN Popped later on Tuesday, but it is starting to roll over today, so we should be on day 52 and a drop into the day 60 area would lead into next week ( Bitcoin trades 7 days a week, so day 60 would be next Friday on January 3rd, but the low does not have to be EXACTLY on day 60.

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 BITCOIN – So I have discussed a possible $120,000 target. Can we still get there? After a drop into day 60, even if that was down at $80,000 as shown here, we could form an inverse H&S pattern and run to $120,000 in the next 60 day daily cycle. At THIS point, the Crypto stocks may follow Bitcoin higher, so we can look for buying set ups near day 60 in Crypto next week too (or the ETFs).