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MES: Ice and Fire Could Blow the U.S. Economy Off its CourseCME: Micro E-Mini S&P 500 Futures ( CME_MINI:MES1! ) #Microfutures In “A Song of Ice and Fire”, American author George Martin painted a mystical land where dragons spit out flame to destroy a whole city and a winter that last one hundred years. Game of Thrones, the popular HBO TV series, was adapted from Martin’s book. In 2025, we seem to be reliving these moments. California wildfires have claimed dozens of lives, burnt down thousands of homes, and caused an estimated $250 billion in damage. Meanwhile, Winter Storm Blair raged coast-to-coast, bringing heavy snow across the Great Plain to Mid-Atlantic. The storms shut down interstate highways, caused thousands of airport delays and racked up 350,000 power outages. At the time of this writing, Polar Vortex is bringing freezing temperature back to the lower 48 states. These weather perils are very destructive. In my opinion, the forces of nature could cause real damage to the entire U.S. economy. Firstly, we could see a rebound in inflation The Bureau of Statistics (BLS) reported that US CPI increased 0.4% in December and went up 2.9% year-over-year (YoY). Of which, the energy index decreased 0.5% YoY with energy commodities gasoline and fuel oil falling 3.4% and 13.1%, respectively. In contrast, energy services such as electricity increased 2.8% and natural gas (piped) rose 4.9% YoY. The chart shows a correlation between CPI and natural gas prices. The underlying logic is the U.S. economic reliance on natural gas. According to the Energy Information Administration (EIA), about 43.1% of the electricity in the country was generated by natural gas. In “Nat Gas: Trading the Weather”, I explained how cold temperatures increase natural gas demand for generating electricity and heating up homes. Higher natural gas prices affect not just the storm-hit regions, the entire country also bears a higher cost for energy services. Larger utility bills raise the cost of producing and distributing all goods and services. A leading indicator: When natural gas prices rise, inflation will likely go up. Conclusion: As natural gas went up sharply, we could expect a higher CPI for January. Secondly, we could see economic slowdown and higher unemployment Many businesses in the passage of winter storms suffered loss of sales. People in parts of Los Angles were evacuated. The total cost for insurance payout, loss of revenue, debris cleanup and rebuilding amounts to hundreds of billions of dollars. Total US GDP was $28 trillion last year, or about $2.3 trillion per month. A quick calculation shows that the weather perils could shave off 1/10th of the US national output for the month of January! Many S&P 500 companies are based in California or in the storm-hit regions. The actual damage to them will be revealed when they report quarterly earnings in April and May. The Bureau of Economic Analysis will report Q1 GDP on April 30th. US unemployment has been on the rise since mid-2023. In my opinion, the A.I. driven technological revolution is responsible for many High-Tech layoffs. On January 10th, the BLS released its nonfarm payroll report and showed that unemployment in the Information sector was 98,000 in December 2024, up from 86,000 a year ago. December is the busiest month for the Retail sector. However, retailers report total unemployment of 897,000 for the month, up 87,000 or 11% from December 2023. When the BLS updates its payroll report in January, I expect to see higher unemployment data. The month-to-month data could be even worse, as January is usually a slow month after the December holiday season. In addition, winter storms and wildfires would push more businesses to shut down and lay off employees. Finally, the uncertainty around economic policies under the new administration I expect President Trump to raise “ice and fire” on his own. If his first term is any guide, we would see plenty of drastic policy changes impacting various industries. Uncertainties are not well embraced in the world of investment. Any new policy initiative could bring the market to chaos when the news breaks, regardless of its long-term effect. During the first term, important policies (such as new tariff) were usually announced from Twitter tweets. This time around, they would likely come out of Truth Social tweets. Trading with Micro E-Mini S&P 500 Futures In my opinion, the U.S. stock market will face more volatility in the coming months. Key economic data could be disappointing for investors. • When the January nonfarm payroll report is released on February 7th, monthly employment data could trend lower, while unemployment rate ticks up. Signals of economic weakness could send the stock market lower. • When the January CPI data is released on February 12th, the headline inflation could move higher. If this is the case, the Fed is less likely to lower interest rates. The stock market will face downward pressure. • The Fed will meet on January 29th. According to CME Group FedWatch Tool, the futures market prices a Fed decision of no-change at 97.9%. However, the market consensus shows that Fed Funds rates could drop to 3.25-4.00% by December, indicating 1-4 rate cuts in 2025. The Fed has not committed to any further rate cut. www.cmegroup.com Given these scenarios, a trader could explore short-term opportunities by shorting the S&P 500 prior to the Big Report Dates. The CFTC Commitment of Traders report provides further support to this thinking. The latest data shows that, as of January 14th, Leverage Funds hold 151,543 long positions and 448,908 short positions for E-Mini S&P 500 futures. Despite the S&P nearing its all-time high, “Smart Money” already turns bearish. Shorts outweigh longs by a 3-to-1 ratio. • They are also bearish on Nasdaq 100, by a 1:2 long-short ratio (43,254 vs. 82,724) • This contrasts with the Dow contracts sharply. Leverage funds own Micro Dow by a 3:2 long-short ratio (17,591 vs. 10,051) during the same period. The MES contracts offer smaller-sized versions of CME Group’s benchmark S&P 500 futures (ES) contracts. Micro futures have a contract size of $5 times the S&P 500 index, which is 1/10th of the E-Mini contract. Micro contracts are very liquid. CME Group data shows that 1,095,979 contracts were traded on Thursday, January 16th. Open Interest at the end of the day was 129,228. Buying or selling 1 MES contract requires an initial margin of $1,525. With Friday closing price of 6,040, each March contract (MESH5) has a notional value of $30,200. Compared with investing in stocks, the futures contracts offer a built-in leverage of about 20 times (=30200/1525). Hypothetically, if S&P futures price falls 10% to 5,436, the price change of 604 points (6,040-5,436) will translate into $3,020 in profit for a short position, given each index point equal to $5 for the Micro contract. Using the initial margin of $1,525 as a cost base, the trade would produce a theoretical return of 198% (=3020/1525). The risk to short Micro S&P is that the US stock market continues its spectacular rally. To limit the downside risk, a trader could set up a stop-loss when entering a short position. For illustration, a short trade executed at 6,040 could be combined with a 6,200 stop. If the S&P goes up to 6,500, the trader’s position would be liquidated well before that. The maximum loss would be $800 (= (6200-6040) * $5). Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:MES1!Short
by JimHuangChicago
Can a breakthrough to the upside be maintained of S&P500?From the technical side, we are seeing a small push higher, breaking above a short-term downside line. Despite this being a somewhat positive occurrence, we would rather wait to see where we close at the end of Friday. For more information, please see the video. MARKETSCOM:US500 RISK DISCLAIMER 74.2% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Past performance is not necessarily indicative of future results. The value of investments may fall as well as rise and the investor may not get back the amount initially invested. This content is not intended for nor applicable to residents of the UK. Cryptocurrency CFDs and spread bets are restricted in the UK for all retail clients.
MARKETSCOM:US500
by Marketscom
Planning Your Financial Future: A Balanced Approach to InvestingTake a moment to reflect: What do you want to achieve in life? Will you be able to consistently set aside money in the months and years to come? If you're planning to invest, it’s important to think long-term and adopt a strategy that minimizes risk while maximizing growth opportunities. Rather than investing a large sum all at once—for example, $20,000—it’s often more effective to spread your investment over time. For instance, you could invest $1,000 each month for 20 months. This approach, known as dollar-cost averaging, allows you to buy at different price points, effectively averaging out the highs and lows of the market. It also helps you remain emotionally detached from market fluctuations since both rising and falling prices can work in your favor. If you maintain a steady cash flow from your job and invest regularly in something like the S&P 500, this method can work even better. Additionally, you can adjust your strategy by contributing less during times when the market is overbought and saving that extra cash for opportunities when the market offers significant discounts. Remember, everyone’s financial situation is unique. Your paycheck, expenses, and goals will shape your strategy. While I can't tell you exactly how to invest, this method of disciplined, consistent investing with flexibility for market conditions has worked well for me—and it might work for you too.
SP:SPXEducation
by Matthiastocks
S&P 500 Index Drops to 2-Month LowS&P 500 Index Drops to 2-Month Low On Friday, the US unemployment data was released, as reported by ForexFactory: → The unemployment rate dropped from 4.2% to 4.1%; → The number of new jobs (Non-Farm Employment Change) increased by 256,000 over the month, although analysts had forecast an increase of 164,000 (previous value = 212,000). According to Reuters, the strong labour market data strengthened the market participants' view that the Federal Reserve will be cautious in cutting interest rates in 2025. Based on CME Group’s FedWatch tool, traders expect the Fed to reduce borrowing costs for the first time in June and then keep it at that level for the remainder of the year. Expectations that tight monetary policy will persist longer than usual have led to bearish sentiment. As a result, the S&P 500 index (US SPX 500 mini on FXOpen) dropped below the 5,800 mark this morning, its lowest point since early November. Technical analysis of the S&P 500 index (US SPX 500 mini on FXOpen) shows: → A bearish Head and Shoulders (SHS) pattern is visible on the chart; → The price has broken below the median of the ascending channel (marked in blue). The strengthening bearish sentiment may lead to: → The price fluctuating within the descending channel, the boundaries of which are already visible (marked in red); → The median of this red channel currently acting as support. It is possible that the intensification of bearish sentiment will result in the S&P 500 index (US SPX 500 mini on FXOpen) declining towards the 5,700 level, which may be reinforced by the proximity of the lower boundary of the ascending channel. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
FXOPEN:SPXM
by FXOpen
2
Rising bond yields hurting the S&P 500 indexThe rising bond yields is one of the top reasons why the S&P 500 index has pulled back in the past few months. Data shows that the 30-year yield surged to 5% for the first time since 2022. The 5-year and 10-year yields have also continued rising in the past few months. These yields rose after the US published strong nonfarm payrollsdata on Friday. According to the Bureau of Labor Statistics (BLS), the economy added over 264k jobs data, higher than the median estimate of 112k. The unemployment rate dropped to 4.1%, the lowest level in three months. Therefore, these numbers confirmed the Federal Reserve’s view that the labor market was doing well. Officials are now focusing on the steady inflation and have hinted that the bank will only deliver two cuts this year. Last year, we wrote about the bond vigilantes and warned that they may impact the stock market. These vigilantes are investors who typically push bond yields significantly higher when government spending is rising.
CME_MINI:ES1!Short
by POWERFUL_TRADERS
S&P 500: Bearish Momentum BuildsAs we move further into 2025, the S&P 500 continues to show signs of weakness, intensifying the bearish outlook from my last post. The Rising Channel breakdown and Head and Shoulders (H&S) pattern remain dominant, with the price now trading firmly below the 50 EMA. Attempts to reclaim the Rising Channel have failed, confirming that the long-term bullish structure is no longer in play. The neckline of the H&S pattern, previously broken, has become a strong resistance zone, reinforcing the bearish momentum. The 50 EMA has flipped to resistance, making it even harder for bulls to regain control. Currently, the 200 EMA is providing critical support. If this level fails, the downside momentum could accelerate significantly, leading to much lower targets. Key levels to watch include 5,687.33, 5,600.45, and the channel projection target of 5,119.26. Bulls will need to defend the 200 EMA and push the price back above the 50 EMA to have a chance at reversing this trend. Otherwise, the market seems poised for further downside. Let me know how you’re approaching this setup shorting, waiting for a bounce, or something else? Stay sharp and trade carefully! 🚀
SP:SPX
by CryptocurrencyWatchGroup
8
SPX Continues to Fall Following the NFP ReleaseAfter the surprising report of 256k jobs created compared to the expected 160k, the U.S. index has experienced a decline of over 1% in the last trading hours. This is due to the perception that strong employment data could be counterproductive to the outlook for future interest rate cuts by the Fed. Lateral Range: Recently, the price has been trading within a significant lateral range between the 6k-point ceiling and the 5.8k-point floor. With the recent bearish movement, a break below the lower boundary of the channel could end the current consolidation and favor a new short-term bearish outlook. Sustained oscillations below the mentioned support level could define the next downward price movement. RSI: At the moment, the RSI is oscillating below the indicator's neutral 50 line. This indicates that bearish momentum dominates the market, with no signs of oversold conditions that might suggest potential bullish corrections. Key Levels: 5.8k: This level currently serves as the relevant support zone, coinciding with the lower boundary of the lateral channel and the 23.6% Fibonacci retracement level. Persistent oscillations below this level could support a bearish outlook in the coming sessions. 6k: This represents the primary resistance level on the chart. Oscillations near or above this level could end the ongoing bearish pressure and pave the way for new all-time highs. 5.6k: The next significant support zone, aligning with the 38.2% Fibonacci retracement level. Oscillations near this level could lead to a solid bearish trend and completely negate the long-term uptrend that has been in place since August 2024. By Julian Pineda, CFA - Market Analyst
SP:SPX
by FOREXcom
SP500: Watch This Key Support LevelStrong US jobs data was released today at 14:30 CET, showing 256K new jobs versus the expected 164K, while the unemployment rate fell to 4.1%. This stronger-than-expected data could lead to more risk-off sentiment, as 97% of speculators now believe the Fed will hold rates steady at its next meeting. As a result, with stocks pulling back and the USD strengthening, even cryptocurrencies could face more weakness. Remember, Powell delivered a hawkish cut back in December, when they noted that there can be less cuts in 2025 due to strong economic projections for 2025 which can bring infaltion back up so they must be carefull with rate decision. And this data today is reason why FED may stay on old, rahter than cut and why then stocks can resume even low, which have been in corrective territory since the last Fed meeting in December.The key focus now is identifying the next major support level for stocks. I believe that once stocks turn back to the upside, it could open opportunities across other assets, including cryptocurrencies. Looking at the S&P 500 futures contract, there has been a slow but steady recovery since early November, following Trump’s win in the US elections. However, the market may attempt to liquidate latecomers who joined the stock rally after Trump’s victory. The 5,700 level on the SP500 futures stands out as a critical support zone, acting as a “stop-loss” level for many positioned in the well-known “Trump trade.” If the price reaches this area, more liquidations could occur, potentially clearing the way for a stronger bounce. Markets rarely move straight up that will profit everyone; liquidations often happen on the way higher. There is no easy money. From an Elliott Wave perspective, the sharp drop from all-time highs looks like an incomplete correction. The current sideways movement likely forms wave B, suggesting that wave C could lead to more liquidations toward the 5,800 level, which I see as a very important support zone.If this is indeed is a triangle in wave B, keep in mind that moves out of triangles are final in the sequence, meaning any drop could be limited before the market turns higher. So, I still believe risk-on sentiment will return, but this may not happen until Trump officially returns to office and market positioning settles for 2025. Regarding Bitcoin, I see the 85,000–87,000 area as a very interesting support zone, where more downside could be limited. Grega
CME_MINI:ESH2025
by ew-forecast
S&P500 // neutral zoneThe market is in a neutral zone. The trend is still long on the weekly, so a break above the long trigger (green), that is the previous daily breakdown, will invite more buyers, and the long expansion phase may kick in. If today it closes significantly below the weekly impulse base, the first targets are the daily and the weekly support levels. In my opinion, day traders have to wait. for the price to get out of this neutral zone. ——— Orange lines represent impulse bases on major timeframes, signaling the direction and validity of the prevailing trend by acting as key levels where significant momentum originated. Level colors: Daily - blue Weekly - purple Monthly - magenta H4 - aqua Long trigger - green Short trigger - red ——— Stay grounded, stay present. 🏄🏼‍♂️ <<please boost 🚀 if you enjoy💚
CAPITALCOM:US500
by TheMarketFlow
SP500 - detailed wave countHow Trump's tariff, economic plans could shake the US dollar Reports indicate President-elect Donald Trump may declare a national economic emergency to enact controversial tariff policies under the International Economic Emergency Powers Act (IEEPA). Despite criticisms, Trump remains committed to his proposed economic measures. Yahoo Finance reporter Alexandra Canal examines how the US dollar (DX=F, DX-Y.NYB) might respond to Trump's tariff plans and overall economic agenda, inversely causing a reaction in S&P 500 (^GSPC) earnings growth. To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend here. This post was written by Angel Smith
CME_MINI:ES1!
by POWERFUL_TRADERS
Walmart : First bullish signal! Possible END of the retracement!Walmart (officially WalMart, Inc.), the multinational retail corporation based in the United States, has an impeccable technical outlook, as we recalled in a previous post. Its trend is clearly bullish (Bull), but on December 9th (red vertical line), it began a retracement phase due to the significant accumulated increase it had experienced. The price has retraced to the first key zone of 89-90 (23.6% Fibonacci) and, for now, has respected it. If it breaks below that zone, the price could fall to around 85 (38.2% Fibonacci). On January 6th, the FIRST bullish (Bull) signal appeared on the chart, and the price closed yesterday in an important zone, which, if surpassed, could mark the end of the correction and the beginning of a new bullish impulse toward NEW HIGHS. We need to be attentive because a H4 candle close above 92 would give us a clear signal to enter long (Bull). --------------------------------------------------------------------------- Strategy to follow: ENTRY: We will open 2 long positions if the H4 candle closes above 92. POSITION 1 (TP1): We close the first position at the highs zone of 95.8 (+4.2%). --> Stop Loss at 88.5 (-3.5%). POSITION 2 (TP2): We open a Trailing Stop position. --> Initial dynamic Stop Loss at (-3.5%) (matching the 88.5 of position 1). --> We adjust the dynamic Stop Loss to (-1%) when the price reaches TP1 (95.8). SETUP CLARIFICATIONS *** How to determine which 2 long positions to open? Let’s take an example: If we want to invest 2,000 euros in the stock, we divide that amount by 2, and instead of opening 1 position of 2,000, we will open 2 positions of 1,000 each. *** What is a Trailing Stop? A Trailing Stop allows a trade to continue gaining value when the market price moves in a favorable direction but automatically closes the trade if the market price suddenly moves in an unfavorable direction by a determined distance. That determined distance is the dynamic Stop Loss. --> Example: If the dynamic Stop Loss is at -1%, it means that if the price drops by -1%, the position will be closed. If the price rises, the Stop Loss also rises to maintain that -1% during the increases, thus reducing the risk until the position becomes profitable. This way, one can take advantage of very strong and stable price trends, maximizing profits.
NYSE:WMTLong
by jmesado
TSM: Growth and Charts Align for 15%+ Target?Hey Realistic Traders, Will NYSE:TSM Create a New All-Time High? Let’s Dive In.... TSMC is the world’s largest contract chipmaker. Recent Earning Call reported whooping third quarter revenue of $759.69 billion, marking a YoY increase of 36.5%. The performance is beating the market forecast. Double Digit Revenue Growth is driven by demand for AI Chips especially with major client like NVIDIA & Apple and 3-nanometer &5 nanometer technology in Smartphones. TSMC Chief Financial Officer Huang Renzhao shared optimistic project for the company. TSMC expect Q4 quarterly revenue growth of approximately 13%, sligtly above the market the market expectation. Strong AI-Related demand predicted to persist for year, inlined with the company’s perfomance and expectation. The positive sentiment support our bullish call on NVIDIA. Technical Analysis On the daily timeframe, TSM has remained above the EMA200 line for over a year, maintaining its bullish trend. On August 5, 2024, TSM rebounded impulsively from the EMA200 line after completing an ABC correction pattern, signaling the start of a new bullish wave. The second and fourth corrective waves have retraced to the Fibonacci 0.382 and 0.618 golden ratios, respectively, aligning with Elliott Wave rules that typically indicate further upward movement. In addition to the Elliott Wave analysis, a breakout from a Descending Broadening Wedge pattern has been identified. Such breakouts often signal the continuation of the prevailing market trend. Therefore based on these technical analysis, I foresee a potential upward movement toward the first target at $217.85 or second target at 234.46 This outlook remains valid as long as the price holds above the stop-loss level at 177.95 Support the channel by engaging with the content, using the rocket button, and sharing your opinions in the comments below. Disclaimer: "Please note that this analysis is solely for educational purposes and should not be considered a recommendation to take a long or short position on Taiwan Semiconductor."
NYSE:TSMLong
by financialfreedomgoals101
Johnson & Johnson Analysis | UpdatedIn this case of Johnson & Johnson (JNJ) stock, it is at a sensitive point where support from a descending channel on the daily chart is being challenged. This level can be a turning point for the stock and if the level holds, then there is a possibility of the stock rising to the $155 – $157 range as shown by the potential target. There are some technical indicators which show that the downtrend is weakening and there is a possibility of the prices turning around in the near future as the MACD depicts a bullish divergence while the RSI shows that the prices are in the oversold region. Also, volume will be a major tool in determining the validity of the reversal. Thus, if the stock goes up, the volume should increase substantially, which would increase the probability of the stock reaching the channel’s upper edge. From the macroeconomic perspective, the current Fed Funds interest rate and the negative Sharpe Ratio suggest that the market is becoming more cautious, which, however, does not rule out the possibility of the stock movements similar to those of JNJ. This is a make-or-break time for the asset. If support continues to hold and there are other signs of a reversal such as patterns or higher volumes then JNJ can experience a substantial change in trend.
NYSE:JNJShort
by Gui_Cabral
Johnson & Johnson | Analysis In this case of Johnson & Johnson (JNJ) stock, it is at a sensitive point where support from a descending channel on the daily chart is being challenged. This level can be a turning point for the stock and if the level holds, then there is a possibility of the stock rising to the $155 – $157 range as shown by the potential target. There are some technical indicators which show that the downtrend is weakening and there is a possibility of the prices turning around in the near future as the MACD depicts a bullish divergence while the RSI shows that the prices are in the oversold region. Also, volume will be a major tool in determining the validity of the reversal. Thus, if the stock goes up, the volume should increase substantially, which would increase the probability of the stock reaching the channel’s upper edge. From the macroeconomic perspective, the current Fed Funds interest rate and the negative Sharpe Ratio suggest that the market is becoming more cautious, which, however, does not rule out the possibility of the stock movements similar to those of JNJ. This is a make-or-break time for the asset. If support continues to hold and there are other signs of a reversal such as patterns or higher volumes then JNJ can experience a substantial change in trend.
NYSE:JNJLong
by Gui_Cabral
A Secular Bull Market Will Face Strong HeadwindsCME: Micro E-Mini S&P 500 Futures ( CME_MINI:MES1! ) The Year of the Dragon is quickly approaching the end. If you invested in U.S. stocks, the chances are you have a pretty good year so far. Let’s review how major U.S. stock market indices performed (data as of December 30th): • The blue-chip Dow Jones 30 trading at 42,992 Midday today, up 12.8% in 2024. This is a back-to-back gain after a 13.7% annual return in 2023. This year, the Dow performed better than its 5-year average of 8.5%. • The broad market index S&P 500 quoted at 5,899, up 23.7% this year, ahead of its 5-year average of 14.5% but below the 2023 gain of 24.2%. • The Tech-heavy Nasdaq Composite closed at 19,453, up 29.6% year-to-date, which is below its 2023 gain of 43.4%, but above its 5-year average of 17.1%. • The small-cap Russell settled at 2,212, up 9.1% YTD, below last year’s 15.1%, but above the 5-year CAGR of 6.1%. U.S. stocks grew less spectacularly comparing to 2023, however, they still outperformed its global peers, from developed countries to emerging markets alike: • The Nikkei 225 (Japan) gained 21.1% in 2024. However, this remarkable performance is dented when considering the 11% Yen depreciation against the dollar this year. • The SSE (China) gained 14.8%, above its 5-year aggregate of 13.2%. Depending on when you entered the Chinese stock market, your return could vary significantly. • The FTSE 100 and the Stoxx 50 indices were up 5.4% and 8.6% YTD, respectively. The stock performance in Europe lags the U.S. in 1-year, 3-year and 5-year terms. • The Nifty (India) gained 9.9% this year and 68.3% total in five years. This showcases India as a growing world economy in the 21st century. • The Ibovespa (Brazil) lost 9.4% in 2024 and gained only 3.2% over five years. The 2025 Outlook The new Trump administration will assume power on January 20th, and the Year of the Serpent will start on January 29th (the Lunar New Year). Judging from campaign promises and new Cabinet nominations, investors expect dramatic policy changes in the coming months and years. Heightened uncertainties will result in higher stock volatility, which increases the overall risk of investing. With a lot still up in the air, even the Federal Reserve does not factor in policy changes in their economic forecast. Today, I will attempt a discussion on the stock market valuation through the lens of the Discounted Cash Flow (DCF). In January, during The Leap — Paper Trading Competition by TradingView, I will publish a deep-dive analysis on the “Magnificent Seven” stocks, on how they will fare under the new administration policies, and how they will impact the S&P 500 index together. To refresh our financial knowledge, the DCF model says that an asset’s value is the present value of its expected future cash flows. In the numerator, Cash Flow is a function of revenue minus cost. In the denominator, the weighted average cost of capital (WACC) is applied to discount the cash flows. Potential policy impacts on business growth (corporate revenue and profitability): • Tailwind: The “America First” policy is bullish on U.S. businesses. It will help bring manufacturing back onshore, create new jobs and support consumer spending. • Tailwind: Lowering corporate income tax from 21% to 15% will improve profitability. • Headwind: Higher tariffs will raise retail prices as well as input costs for manufacturing. Higher prices will reduce sales volume for most businesses. • Headwind: Slashing federal spending will reduce sales revenue from industries relying on government spending, including healthcare, retirement and defense spending. Potential policy impacts on borrowing costs: • Headwind: The recent rebound in inflation has caused the Fed to hold back on future rate cuts. Fewer cuts mean higher expected future interest rates. This is the main reason behind the 700-point plunge in the Nasdaq following the December FOMC. • Headwind: Higher tariffs will fuel inflation. Learning from the past, the magnitude of tariffs could be large, making it impossible to find alternative products without higher costs. This will further reduce the Fed’s appetite to lower interest rates. Taking as a whole, it is my opinion that U.S. stocks will face more headwinds than tailwinds in 2025. The structural changes in how to run the government more efficiently will be positive over the long run, but they will cause pain if you are caught in the middle. Overall, I would adopt a more defensive strategy when trading U.S. stocks. Trade Setup with Micro E-Mini S&P 500 Futures With heightened uncertainties, I would prefer shorter-term trading strategies based on incoming information and avoid making longer-term directional bets. We could explore setting up a trade one week ahead of a “Big Report Date”, including the monthly CPI and nonfarm payroll reports and the FOMC meetings eight times a year. With higher volatility, investors tend to overreact to these big data. This makes short-term outsized gains more likely when you are proven correct in your view, by tapping into the leveraged investment instruments like futures. Micro E-mini S&P 500 futures (MES) offer smaller-sized versions of CME Group’s liquid benchmark E-mini S&P 500 futures contracts. They are designed to manage exposure to the 500 U.S. large-cap stocks tracked by the S&P 500 Index, widely regarded as the best single gauge of the U.S. stock market. The Micro E-mini S&P 500 futures contract is $5 x the S&P 500 Index and has a minimum tick of 0.25 index points. With Monday quote of 5,954, each March contract (MESH5) has a notional value of $29,770. Buying or selling one contract requires an initial margin of $1,522. Hypothetically, if a trader wants to trade the January 3rd, 2025 Nonfarm Payroll report, he could long or short the MES contract on Monday, December 30th, 2024. Generally speaking, solid job growth tends to point to the economy overheating. This would raise the Fed’s motivation to keep interest rates high. On the contrary, higher unemployment may prompt the Fed to lower interest rates to help out. Theoretically, if a trader wants to trade the January 15th, 2025 CPI report, he could long or short the MES contract on or around January 8th, 2025. Typically, lower inflation supports the Fed to bring rates down to a long-term normal level, while persistent high inflation would force the Fed to keep rates higher for longer. Referring back to the DCF model, higher interest rates would reduce the present value of asset price, while lower rates would raise the price. A follow-up on the MES is scheduled to publish on January 20th, 2025, at the start of the LEAP contest. With the “Magnificent Seven” accounting for 30% of S&P 500 valuation, I would apply a collective trend of these stocks to construct a trading strategy. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:MES1!
by JimHuangChicago
2
S&P 500: Consolidation and Bearish Momentum Below Key LevelsS&P 500 Technical Analysis The price dropped on Friday and stabilized within bearish momentum. In general, as long as it trades below 6,022, the bearish trend is likely to continue toward 5,936, with the potential to reach 5,863 if the downward momentum persists. The S&P 500 is currently consolidating between 5,993 and 5,936 until a breakout occurs. Key Levels: Pivot Point: 5993 Resistance Levels: 6022, 6053, 6099 Support Levels: 5936, 5919, 5863 Trend Outlook: Consolidation between 5993 and 5936 Bearish Trend while below 6022
OANDA:SPX500USDShort
by SroshMayi
Bearish drop?S&P500 (US500) is reacting off the pivot and could drop to the 1st support which has been identified as an overlap support. Pivot: 6,027.45 1st Support: 5,869.16 1st Resistance: 6,182.03 Risk Warning: Trading Forex and CFDs carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Forex and CFDs may not be suitable for all investors, so please ensure that you fully understand the risks involved and seek independent advice if necessary. Disclaimer: The above opinions given constitute general market commentary, and do not constitute the opinion or advice of IC Markets or any form of personal or investment advice. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, are intended only to be informative, is not an advice nor a recommendation, nor research, or a record of our trading prices, or an offer of, or solicitation for a transaction in any financial instrument and thus should not be treated as such. The information provided does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Please be aware, that past performance is not a reliable indicator of future performance and/or results. Past Performance or Forward-looking scenarios based upon the reasonable beliefs of the third-party provider are not a guarantee of future performance. Actual results may differ materially from those anticipated in forward-looking or past performance statements. IC Markets makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or any information supplied by any third-party.
ICMARKETS:US500Short
by ICmarkets
SPX Head & Shoulders Top on Daily... Watching for $5600 to $5200Hi Traders, SPX is showing signs of a potentially bearish formation—a head and shoulders top. Historically, this pattern has signaled increased downside risk for equity markets. As the price draws closer to the neckline, a break below could take us to the next major support level around 5,600. This will be a crucial zone to for traders and investors to monitor closely. Market conditions could sour quickly and an accelerated drop should cause traders to act cautiously over the next couple of weeks. Good luck out there. Mark
SP:SPXShort
by MarkStPeter
Prediction: Markets back to All-Time Highs in TWO WEEKS! NASDAQ:QQQ AMEX:SPY I won't lie to you friends, this is MAXIMUM FUCKERY FRIDAY! It sucks across the board but lets just zoom out and look at all the data. We are still in an uptrend, still holding above the 9ema, and still GREEN on the H5 indicator. I'm buying the DIP. MY BULLISH PREDICITON: NASDAQ:QQQ & AMEX:SPY BACK TO ATH's WITHIN TWO WEEKS! Yes, I bought 5c NASDAQ:QQQ Jan. 10th 2025 $520 Calls I'm doing this only to put my money where my mouth and prediction is. I am ok with losing if I'm wrong. Don't get these NASDAQ:QQQ short term calls and prediction twisted with me being a forever bull. I understand how markets work and I'm simply going off my TA, knowledge, and GUT. I'm fully ready to exit every trade that goes against me if I'm wrong on the markets rebounding and continuing higher into January friends. When we do signal the bigger correction is happening through our strategies I will exit every RED H5 indicator or stock that goes against my rules. I'm simply giving a little bit of excess rope due what the FED did last week that kicked this whole thing off. I still don't see the Bull Market being over and If i'm wrong, I'm wrong. I will still be up massively on the year and I'll count it as one of the few times that I've been wrong. Still winning more than losing which is the only goal to strive for in trading. Not financial advice
NASDAQ:QQQLong
by RonnieV29
7
SPX will go to 62201. On the daily chart, SPX is trading within an upward channel, with the MACD lines positioned above the zero line. 2. SPX has risen for three consecutive days, breaking through the key 6000 level. The next resistance is expected near 6100. If a pullback stabilizes around 5982, it could push toward a new high of 6220 (the 6220 level corresponds to a Fibonacci retracement). 3. Once SPX makes a new high above 6220, it could signal a potential pullback, with support expected around 5700.
SP:SPXLong
by WhaleTJ