Market Insights: Preparing for 2025 with Key ETF TrendsHey Friends ,
I’ve refined this idea to invite you into my world, helping you see my perspective so you can shape your own. — This is a long read but well worth it.
Dropbox link for Valuable charts & supplementary Information: The folder will continuously be added to over the next 5 days.
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Before we begin, a quick disclaimer: I am not a financial advisor. This update is provided for informational purposes only, and any financial decisions you make are solely your responsibility.
My Current Market Approach
Recent market price action has left me skeptical about its health and bullish narrative.
In response, I’ve adopted a more defensive stance with a time-based reevaluation strategy. . This approach prevents me from “throwing money into the fire” during periods of uncertainty.
I’ve converted the majority of my positions into a 4% yield cash ETF and am actively exploring opportunities outside the market to deploy this cash.
This decision comes despite:
• The anticipated Christmas rally many retail investors expect.
• Fear-driven market sentiment, often seen as a buying opportunity.
- New 52 week highs for big players (Apple, Google, Tesla)
For now, patience and caution are my only priorities.
ETF Market Update
Today, I’ll analyze the major ETFs — SPY, QQQ, and IWM — while also highlighting key insights from the VIX.
Let’s dive in!
Understanding the VIX: Signals of Renewed Volatility
The recent VIX sell-off suggested further declines, but instead, it’s showing renewed signs of volatility, indicating we’re not in the clear just yet.
Earlier today, the VIX tried to complete a bear flag that could have pushed it lower. However, it reclaimed a critical horizontal support level in a break-and-retest pattern, signaling that the market sell-off might only be in its infancy.
Key Takeaway:
1. With fintwit investors scaling in for this “Xmas” rally it could get painful real fast.
2. Watch for increased volatility heading into early 2025, as the VIX’s behavior often serves as a leading indicator for market turbulence.
Trend Analysis: SPY
Since the August 2nd lows, SPY has been forming a wedge pattern. Last week’s sharp correction broke the wedge decisively, and bulls have since failed to reclaim the broken level. This confirms a break-and-retest pattern, favoring further downside levels pressure.
Key Observations:
• Notice the Triangle Topping Pattern: Formed between December 2nd and 18th.
• MACD Weakness: SPY’s MACD is struggling to cross above the zero line, further confirming bearish momentum.
Trend Analysis: QQQ
The QQQ chart mirrors SPY closely.
Key Observations:
• Bearish EMA Crossover 5EMA&9EMA
• Lack of Market Independence: QQQ and SPY’s alignment raises concerns for investors relying on diversification. Amplified Risks: The lockstep movement during corrections suggests heightened risks for broader markets.
Trend Analysis: IWM
Small-cap stocks continue to underperform, even with positive macro signals like rate cuts and declining inflation.
Key Levels and Patterns:
• a sharp correction right now would Help IWM in developing its and Handle Formation:
- The $313 target cup& handle target is still viable but faces strong resistance.
• Bearish EMA Crossover: A developing 5 & 9 EMA death cross signals further downside potential.
TA- What’s an EMA Death Cross?
A death cross occurs when a shorter-term EMA (like the 5-day) crosses below a longer-term EMA (like the 9-day). This is a bearish signal that often predicts sustained downward momentum.
Key Takeaway:
IWM’s persistent weakness highlights broader market hesitation toward risk-on assets, despite improving macroeconomic conditions. Is this a repeat of the …..
Trading Setup
Trading Wedge Patterns: A Quick Guide
Wedge patterns, like the one seen in SPY, can be powerful trading signals:
1. Breakout Direction: Watch for the price to decisively break above (bullish) or below (bearish) the wedge.
2. Volume Confirmation: A breakout accompanied by higher volume increases its validity.
3. Break-and-Retest: After the breakout, a retest of the wedge’s boundary often confirms the direction.
4. Stop Loss Placement: For bearish patterns, stops can be set above the upper wedge boundary; for bullish patterns, below the lower boundary.
In SPY’s case, the break-and-retest to the downside suggests continued bearish pressure.
Stay Tuned for Ticker Insights
I’ll dive into CVNA, MSTR, and TSLA, providing a detailed breakdown of their price action and what they might signal for 2025.
If you found this update helpful, leave a like, comment, or reply with your thoughts or questions!
Thanks for reading,
CL
