December 22, 2024: Lower levels are coming

Analysts seldom like to report negative news, and the institutions (banks) nearly never suggest reducing positions and building up cash.
There is always another good value security for clients to buy.
Most independent analysts are not much better. If an investor looks at two analysts' reports, one mentioning a new stock position that should be a '10-banger' or another indicating market weakness, which of the two reports would produce the most interest from the investor?

This short report, however, deals with the second option.

We have been monitoring the 15-year old bull market, over the last year, for any significate sighs of price weakness. And the first sign has just come in.

In Chart 1, we see the Dow Jones Global Index. The primary trend remains up. The Index has made a new all-time high and has not yet reached the top channel line, a level where past corrections begin. So far, so good. No apparent negative outlook.

In Chart 2, we have the global equity market less the strength of the S&P 500. The picture is completely different.

The MS World Index (ex-USA) is starting to correct after bouncing off the upper channel line. The Index is now down 12%.

Over the last 15 years, EVERY TIME the index reached the top channel line, a deep correction develops. The average decline is about 25% over a one-to-two year period.

As market move together, it is very unlikely that the S&P will continue to hold-up when the rest of the worlds markets are pulling back.

If the MS World Index follows the same path it has taken over the last 15 years, we would expect a gradual weakening and lower levels as 2025 unfolds.

On a more positive note, we will be starting our once-a-year holiday special starting on December 25th and ending on January 5 (Chart 3). After the 5th, the special will not occur again for another 12 months. Don't delay. This is an opportunity to get cutting edge market research that can help mange your portfolio through good and not so good market conditions.