Weekly Update - WE Jan 3, 2025
December's failed seasonality, January's poor sentiment
This weekly update will be short as I am traveling this week. Last week's recovery following the previous week’s drop was going well until Friday, which saw another (smaller) drop. The December seasonality did not work. This foretells what the market expects from January.
Overall the sentiment is very bearish on January. January will see some delayed effects of poor liquidity. US yields are high and the Dollar is very strong, which is not supportive of equities.
After Trump gets inaugurated (January 20th), liquidity should reverse with the TGA drawdown. It may be a good enough reason for the market sentiment to turn bullish again, for the yields to recede, and for stocks to go up.
I will close some positions to reduce risk for a week or two and observe. I remember how the market turned in early January 2022, and I don’t think waiting for a week or two would be too costly.
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