Another 48h - Annual Highs 2023 & 2024 In Focus At Start Of 2025

2025/01/05
Another 48h - Annual Highs 2023 & 2024 In Focus At Start Of 2025
“price action above and/or below determines the current trend!
a bullish upward breakout? a bearish downward regression?”



After two brilliant years on the stock market, our German stock market DAX could have a bumpy start to the first full trading week of the new year 2025. Because our German leading index DAX currently seems to be in vain for convinced buyers who can sustainably push the leading index back over the 20,000 mark - like the NDX maybe too. Because it seems like the upcoming inauguration of Donald Trump as US President on January 20th is putting the resolve of us traders and/or investors to a tough test. According to experts, the Republican will probably push forward his “America First” policy, for example by increasing import tariffs! Or should the US fiscal budget be restructured? Are they trying to reduce the external balance? Which could bring a higher DXY in all three of these scenarios. Which would avert imported inflation in the USA - but would not be good for the US stock market, as yields would likely remain up. and would therefore be advantageous for US consumers and US taxpayers - in contrast to the stock market in New York, let alone the NASDAQ:NDX. Be that as it may, I do not expect US inflation to rise again, but rather a longer outgrowth of US stagflation than originally expected. Just like the Fed apparently - which will act more cautiously with the interest rate cutting cycle in 2025, as I had previously thought. So the outlook for stocks in 2025 is solid, but not spectacular. In contrast to the DXY , which could even continue to climb to 112 points or more in 2025.

While I am fundamentally bullish on the DXY today, at the start of 2025, I am fundamentally bearish on the US stock markets DJIA & SP500 and/or NDX today. But I don't dare to formulate a short daily 4XSetUp (yet)! Still prefer to wait until Trump takes office on January 20, 2025 - and then see what happens next? Because in the historical context the stock market is more than averagely too expensive - while the us annual growth rate was and/or is still not significantly higher than the us inflation. For example, let's take the P/E ratio for example. To justify a P/E ratio that is consistently above its own historic average for long periods of time, the US stock market must not only continue to grow, but would need to continue to grow at a continuously increasing rate. From this pov (point of view) the P/E ratio is a classic measure of a stock's value indicating how many years of profits (at the current earnings rate) it takes to recover an investment in the stock. The current S&P500 10-year P/E Ratio is 36.5. This is 79.2% above the modern-era market average of 20.4, putting the current P/E 2.0 standard deviations above the modern-era average. This suggests that the market is Strongly Overvalued.

“How do you see your own Jewish identity? I am proud of being a Jew-although I must admit it took me practically a lifetime to get there. I have suffered from the low self-esteem that is the bane of the assimilationist Jew. This is a heavy load that I could shed only when I recognized my success. I identify being a Jew with being in a minority. I believe that there is such a thing as a Jewish genius; one need only look at the Jewish achievements in science, in economic life, or in the arts. These were the results of Jews' efforts to transcend their minority status, and to achieve something universal. Jews have learned to consider every question from many different viewpoints, even the most contradictory ones. Being in the minority, they are practically forced into critical thinking. If there is anything of this Jewish genius in me, it is simply the ability to think critically. To that extent, Jewishness is an essential element of my personality and, as I said, I am very proud of that.”
George Soros

109.533 : 2024/12/20 - Annual Year High 2024
108.922 : 2024/12/29 - last price action
107.348 : 2023/10/03 - Annual Year High 2023
104.799 : 2024/07/30 - High Before W Trend Reversal Formation
104.426 : 2024/08/02 - High Of The August 2024 2 Day Sell-Off
103.125 : 2024/08/02 - Low Of The 1st Day Of The 2 Day Sell-Off
102.160 : 2024/08/05 - Low Of The August 2024 2 Day Sell-Off
In the case of the price action of the DXY , the highs & lows of last year 2024 and/or high & lows of last year before 2023 are crucial. Because both the highs & the lows of last year 2024 were within the high and low of the last year before 2023. Except for last week - 3 trading days in November 2024. What does that tell us? The price action in DXY is ready to break out upwards this year 2025 - regardless of all the fundamental numbers in relation and or even rumors (if you just look at the price action)! Of course, there is no guarantee for this - but the probability that the price action in 2025 will become more expensive rather than cheaper is fundamentally greater. And this is also due to the fundamental overvaluation on the stock market and/or also the still ongoing US stagflation. even the risk of an increase in the US unemployment rate? A possible impending recession in the USA? Nevertheless, the USA is and remains the cleanest dirty shirt of all economic areas in our so-called West. Which is why I basically want to talk about a EURUSD weakness and/or USDJPY strength in price action - vice versa: DXY strength in price action.


With best wishes and good intentions:
Aaron



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