Pretiorates' Thoughts 66 – Buy, babe buy – or maybe not?
Published on January 21st, 2025
In our analyses, we regularly examine current movements, identify possible influencing factors and assess the general market situation. However, these are not recommendations, but merely opinions and food for thought.
Dear readers!
Recently, the US stock markets were able to regain some of their level, but since December 2024 the bulls have been showing a tired side. The thoughts number 58 also pointed out the 17-year cycle, which has always brought a correction of at least 20% since World War II.
In fact, there are already some scratches on the market picture, growing in number. Another is the ‘Risk Factor’, which measures the futures positions in hard and less hard currencies. The hard currencies include the US Dollar, the Euro, the Japanese Yen, the Swiss Franc and the British Pound. So if investors prefer investments in these currencies, this is also an indication that the willingness to take risks is decreasing (risk off). In the past, these phases were always accompanied by corrections in the stock markets...
Sentiment in the S&P500 has deteriorated significantly since December 2024 and remains in pessimistic territory...
In the short term, however, the ‘Market Pendulum’ indicates that the current technical recovery may continue for a while...
Besides the US stock markets, the other markets are almost forgotten. While US equities still made significant gains in the fall of 2024, the pan-European Stoxx600 Index is actually not making any headway. Currently, it is showing itself from an optimistic side again, but real advances cannot be realized this time either...
Only the German stock market has been impressing for many months. This is particularly impressive because the political elite is anything but supportive. In any case, the mood in the German stock market is significantly better than that in politics...
But one should not forget: for the large German companies represented in the DAX, domestic business in Germany accounts for perhaps 10-20%, with the rest being generated globally. The IT heavyweight SAP and financial stocks in particular are driving the market...
Until a few days ago, the English market was also unable to make any significant advances. This changed with weak economic data, which fueled hopes of lower interest rates. However, the ‘Smart Investors Action’ is already showing an 'exaggeration', so the trend is unlikely to be sustainable...
In addition, the sentiment barometer has already reached its zenith in terms of optimism...
Not much happening with the French either. Here, too, the ‘Smart Investors Action’ is already showing a 'exaggeration' again, which indicates that the last upward trend will soon come to an end...
And the Swiss SMI Index, with its defensive heavyweights Nestlé, Novartis and Roche, has also advanced again recently. However, the more optimistic sentiment could soon fade again according to the indicator...
Conclusion: Investors can continue to take it easy at the start of the new year. And should the stock markets climb a little higher, there would probably be more opportunities to sell.
That’s it for today!
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