S&P500, Nasdaq100, Russell200, DAX, China, Bitcoin & Co

Here comes Santa Clause

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. The author may hold personal positions in the mentioned securities and could benefit from their price movements.

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Managing Winners – Focus on Top Setups

The earnings season is nearing its end, and Nvidia, contrary to my expectations, had little impact on the markets. However, the markets continue their upward trajectory, which I expect to persist through the year-end and likely until Donald Trump’s inauguration.

My focus now is on managing my winning stocks effectively, trailing my risk protections, and investing only in absolute top-chart setups. During periods of strong market rallies, it’s crucial to stick to one’s strategy, avoid opening too many positions, and let winners run whenever possible.

S&P 500, Nasdaq100, Russell 2000 - Here Comes Santa Claus! ...until January 20th!

For me, the U.S. stock market is firmly in bull territory as we approach the year-end. Last week’s pullback didn’t gain momentum, signaling the start of the Santa Claus rally. This year, however, Christmas will statistically last longer – likely until January 20th, the inauguration day of Donald Trump as the new U.S. president. Until then, stock prices will likely reflect positive expectations only, as Trump won’t yet be involved in operational government affairs. Reality may set in after January 21, 2025, as no benefits come without drawbacks.

I expect increased upward momentum, especially in U.S. small caps, which should push the Russell 2000 to new highs. I’m holding onto my liquidity for safety but might add a few trend-strong stocks from the small-cap segment to my portfolio. I’m trailing my risk protections upward and plan to take profits if a pullback with increased volume occurs in my individual stock investments. Post-January 21, I’ll likely adopt a more cautious stance in the following weeks.

This scenario is also supported by the statistics below this post.

DAX - Downward Test Completed

The DAX has repeatedly tested the support zone between 18,700 and 19,000 points over the past weeks. Despite continued underperformance compared to the S&P 500, the index has consistently rebounded upwards.

Given my optimistic outlook for the broader market into year-end, I expect the DAX to surpass the 19,600-point level in the coming weeks, followed by a dynamic move above the 20,000-point mark. This scenario would only be invalidated if the index sustainably falls below the 18,000-point level.

However, my investment focus remains on the U.S. market, as German stocks continue to show relative weakness compared to their U.S. counterparts.

Gold, Silver, Precious Metal Stocks - Comeback Despite Competition?

Last week, gold and gold stocks showed renewed strength. Gold closed the week with a green candle, signaling a potential year-end rally. Achieving the 3,000 USD mark seems realistic in this context.

Gold stocks also rallied, avoiding a return into the descending triangle, which opens up further upside potential. Silver, while stabilizing, demonstrated significantly less momentum than gold and gold stocks.

With the market also showing relative strength against the S&P 500, I will consider a potential investment.

Bitcoin / Cryptocurrencies - Target 101,000 USD? No, Likely More!

As expected, Bitcoin continued its upward trend, and the 100,000 USD mark is being widely discussed as a "magic target" in the media. For me, it’s more of a stepping stone. It’s entirely possible for the price to retest the 90,000 USD level. If this level holds, I expect Bitcoin to quickly surpass the 100,000 USD mark and head toward the next target of 111,000 USD.

The current upward momentum has now spread to other cryptocurrencies. I believe the 100,000 USD mark will be just a brief waypoint, and over the next few months, I consider a move toward 150,000 USD to be the most likely scenario. However, the next pullback will be critical. The extent of Bitcoin’s downward momentum and the associated selling volumes will determine how realistic this scenario is.

As expected, alternative cryptocurrencies (and various other assets traded on crypto exchanges) have surged alongside Bitcoin. Larger coins like Cardano and Dogecoin are already showing relative strength against Bitcoin. This isn’t surprising, as Bitcoin is now regarded as a base investment among crypto investors due to its substantial market capitalization. Other cryptocurrencies, on the other hand, are more easily driven up by speculators – and there’s no market with as many compelling narratives about price surges as cryptocurrencies.

I’m not interested in these speculative plays. I continue to see cryptocurrencies as speculative assets, with no clarity on which technology will dominate in the long run. My investment volume in this sector is fixed and won’t be increased, but I also won’t withdraw any funds. Undoubtedly, cryptocurrencies and blockchain technologies will change the financial world – but which technology will prevail remains a matter of belief and speculation.

China - First Breakout Failed, Is a Comeback on the Horizon?

The KraneShares China Internet ETF (KWEB), which I closely monitor, has fallen back into its previous triangle pattern after an impulsive breakout. At this stage, I consider a further correction of around 10% to the flat uptrend line as the most likely scenario.

Notably, trading volume continues to decrease during price declines, indicating a lack of sellers in the market. This is a positive signal, suggesting that U.S. investors perceive the potential negative impact of Donald Trump’s presidency on Chinese internet companies as limited.

Given the index’s relative weakness, I will not expand my current positions but will continue to hold them.