S&P 500: 2024 Market Cycle
Correction, New All Time Highs, Fed Pivot, Next Bear Market
Through last week the S&P 500 recovered the decline that started the new year, and is now up +0.29% for January. The major market indices, the S&P 500, Nasdaq 100, and Dow Jones all remain at or near all time highs.
To open this weeks note is the chart below that shows market speculators have positioned with the largest long Nasdaq positioning on record— this aligns with the recurring theme shared in the recent newsletters, underscoring the notion that market participation is widespread— reinforcing the idea that 'everyone is in the pool' once again.
The S&P 500 and Nasdaq experienced significant gains thanks to the performance of the 'Magnificent Seven' (Apple, Microsoft, Google, Amazon, Nvidia, Meta, and Tesla) throughout the past year. The Bank of America Global Research fund manager survey, depicted below, marks 'Long Magnificent Seven' as the most crowded trade. Reflecting on this chart and the one above, it raises the prospect of a scenario where the herd mentality leaves the market exposed to a potential sharp reversal.
In this week's letter, I'll offer insights into the essential S&P 500 charts that shape my analysis of market health and direction. Furthermore, I'll outline my speculation on the market cycle in 2024 and where I am looking for outperformance.
The Big Thought— 2024 Market Cycle
Correction, New All Time Highs, Fed Pivot, Next Bear Market