S&P 500, Nasdaq100, Russell 2000, Bitcoin & Co!

Buckle up and enjoy

The content of this post is for informational purposes only and does not constitute investment advice. Please be aware that all investments involve risk, and individual consultation is recommended.

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Weekly strategy

The election of Donald Trump was the event of the week and will continue to drive the stock markets higher until his inauguration. The currently emerging warning signs such as: high money market fund holdings, historically high investment ratio of small investors in the U.S., rising long-term interest rates and thus rising inflation risk, a reduction in free trade, etc. are currently playing no role in stock market reporting and thus in the charts. I am following this trend with a full investment quota in equities and cryptocurrencies and the “watchful eye” will become more and more vigilant as the time until Trump's inauguration decreases, but my current motto is: buckle up and enjoy!

S&P 500, Nasdaq100, and Russell 2000 - America First!

Donald Trump's clear victory brings his "America First" slogan to life in the stock markets as well. The relative strength compared to European stocks has fully returned, with the Russell 2000 (U.S. small caps) taking center stage. This index is performing stronger than the S&P 500 and the Nasdaq 100. There is also a fundamental reason: as shown in the chart below, small caps benefit the most from Trump's planned tax cuts in the U.S. My portfolio is fully invested, and I closed my hedges early in the morning when Trump’s victory became apparent. My focus remains on the U.S., with a small addition of China (yes, even after Trump’s win 😉).

The S&P 500 hit its next target at record speed and seems ready for a brief pause. I have noted this on the daily chart, as I expect any pullback to be moderate, with another 10% potential for the year-end rally, targeting 6,536 points. The S&P 500 shows a slight divergence with the market breadth (A/D line), which serves as a caution but not a reason to reduce my investments. The Russell 2000 is taking the lead in relative strength and is likely to reach a new all-time high soon. If any existing positions show weakness, my search area will focus on this index. For the year-end, the Russell 2000 remains my top pick, with significant catch-up potential relative to the S&P 500, as shown in one of the charts.

One last note on U.S. market euphoria: it's currently driven by U.S. retail investors, who have reached historically bullish positioning, presenting a mid-term warning signal. Interestingly, the anticipation of an "economic president" often surpasses reality. Historically, post-inauguration euphoria has diminished on average – a likely outcome given Trump’s dramatic style.

DAX - Don’t Get Confused!

The DAX was clearly overshadowed by the U.S. election this week, following my scenario exactly. Nevertheless, I still expect the index to reach the 20,000 mark by year-end. The political developments in Germany and the frequent media portrayal of a crisis seem at odds with the DAX's new highs. However, the DAX is far from being written off for the next four years, as it consists of large corporations that are mostly internationally oriented and often have local production facilities in their markets outside Germany.

Some of these companies in the index may adapt and follow a "Trump strategy" with an "America First!" approach. For those looking to confirm their economic outlook for Germany, the MDAX and SDAX, with their lower levels of internationalization, might offer better insights. These indices are currently not of great interest, but if Europe interprets Trump’s election as a "wake-up call," these companies may come back into focus. A similar economic program to the one in the U.S. has become more likely in Europe since Trump's win, likely involving additional debt.

There’s currently no reason for a negative outlook on the DAX. Due to its relative weakness compared to U.S. stocks, only a few DAX stocks are interesting – notably, those with strong production facilities directly in the U.S.

Gold, Silver, Precious Metal Stocks - Strong Competition, but Interesting Mines

Gold is facing strong competition again: As shown in the chart, Bitcoin is now worth more than gold. Personally, I don’t see these two asset classes as comparable, but when it comes to attention, that doesn’t matter. Inflation is likely to gain momentum again with Donald Trump, and more publications are promoting Bitcoin as an inflation hedge. I can’t refute this due to Bitcoin’s youth as an asset class, so I’ll simply focus on the chart.

Currently, it seems gold is still in consolidation mode, with silver following suit. There’s no sign of a "crash," as gold has tested the 10-week moving average, and I anticipate a potential correction to the 2,550 US dollar region, after which an attempt at the 3,000 US dollar mark might occur. Precious metal stocks look particularly interesting, as they marked a recent low last Wednesday and saw more buyers than sellers at that level. If the correction ends, I may add precious metal stocks to my portfolio, as the volume trend suggests a very healthy uptrend.

Bitcoin / Cryptocurrencies - Here We Go! Short Pause, Then Towards 84,000 USD

This week, Bitcoin achieved a new all-time high. The volume was so high that I anticipate a new impulse. I have fully invested my portfolio and added some relatively strong altcoins alongside Bitcoin.

Currently, Solana and Dogecoin are showing relative strength compared to Bitcoin. Ethereum is weaker at the moment, but its initial movement was strong enough for me to add a position here as well. I’m not focused on the technology of these coins, as I trade this market purely on technical analysis and time everything based on Bitcoin.

Right now, it looks like there may be a short pause around the 74,000 USD level before a move towards 84,000 USD. We likely won’t reach the 100,000 mark this year, but I see it as the most probable target for 2025.

Some crypto stocks are reporting earnings this week, and once these are released, I’ll look to build positions there as well.

China - Fear of Trump? Why?

Based on the news coverage, China should be afraid of Trump, but I see it differently – and the charts tell a different story. I’m watching the most traded China Internet ETF in the U.S., KraneShares, and while there have been several unsuccessful attempts to push the index higher, a solid base remains intact. There’s no sign of panic selling among U.S. investors holding “China stocks.” Why should there be? China has become a global power and an independent economic force. I’m sticking to my bullish outlook and my mix of Chinese stocks focused on revenue outside the U.S.