2024: Crouching Tiger, Hidden Dragon
2024 Market Analysis & Outlook
Quick note: I began drafting this analysis on 1/2/2024, dividing time daily to finish this publication. Part of the analysis I had in mind has already started to pan out for the year. Some charts may not reflect recent PA depending on when I wrote certain sections. Some notes may have also been added on different days throughout this draft.
I HIGHLY recommend you split your reading into parts and I HIGHLY recommend you read this 2-3x and take notes. This publication, much like my 2022 analysis, consists of immense educational content for your own learning purposes.
2022-2023 Review
In January 2022, I issued a full yearly outlook and analysis with my expectations. My main thesis included my fractal comparison coined “Fractal of the late 1980s-1990s (Fractal v2.0),” with the expectation of a 3500-3600 target on SPX in the upcoming bear market.
For full understanding, please read the previous publication in full.
2022 Market Analysis
It’s time to do a full, in-depth analysis of the markets. We’re diving deep today to hypothesize projections for the rest of the year. Let’s dive into macroeconomics first. The theme for almost two years was “inflation is transitory, let the printer go brrr.” More money into the markets, more assistance from the Fed, more hopium instilled in investors all…
Fractal of the late 1980s-1990s (Fractal v2.0)
Outcome:
The analysis driven from the late 80s panned out to perfection. This is prescience at its finest. Similarities were seen across all aspects - from technical analysis to macroeconomics - to make this the perfect fractal.
Now that we’re two years from my last publication, it’s time to revisit and provide another outlook for 2024.
2023 Year in Review:
2023 has been a massive year. It’s been a great one to observe the markets and their participants.
Some drunken night led to a brief outlook publication in the Trading Dojo for 2023. From the day of this post, SPX retraced another 200pts leading into mid-March.
For those in crypto, I highly recommend the Trading Dojo.
Many individual names looked bottomed out near the end of 2022 (will dive into this more later).
Some key notes from this post included: heavy volatility, seeing a rally so dire that will turn every single bear into bulls.
And alas, a volatile year it was - from rallying 800pts (March - July), retracing 500pts (July - October), then rallying another 600pts just shy of ATH to end the year.
As I observed sentiment throughout the year, many seemed to be sidelined or macro bearish still. I’ve observed some well-known names on Twitter short the entire rally towards EOY (see previous publication coined “Cocaine Bears.” I’ve observed some macro analysts call for armageddon all year long. Some of this sentiment was used as confluence in my own daily trading and analysis.
$SPX/$SPY/$ES Recap:
What you’ll see in the below chart are some of the most pivotal levels we used in 2023. Most of these levels were derived from prior history while some were newly added by assessing price action.
Price has memory, which emphasizes the importance of zooming out on the chart to help structure your analysis, regardless of timeframe. There’s nothing new in the markets. We see the same patterns and cycles occurring frequently.
My major edge in trading is the curation and usage of key levels. Over time, you’ll start to remember certain ranges and its price action, which you’ll know how to gauge once it’s revisited in the future.
Some ranges I know by heart include: 3796.82-3853.99, 4078-4148.95, 4170.45-4218.70, 4527.76-4545.85-4578.43, and now the newest range of 4701.54-4778.08.
The more screen time you have, the more familiar you become with price and time.
Throughout 2023, I expected high volatility with ranges traded to capitulate bulls and bears alike. From the tech bottom to AI rally to volatile macroeconomic events marking tops and bottoms (*ahem, thanks BOJ)*, we had our fair share of action.
One of the most notable calls was my top call in July. Euphoria in the market is something I intuitively spot now, not kidding. There are moments I feel the market euphoria in my gut, and every time I call “euphoria,” it marks the top. Combine that with technicals, you have a recipe for a 5* Michelin gourmet meal.
On this day, we took SPX 4560p @ 1.8 for a whopping +217% in 15 minutes.
Not long after, we had the introduction of Checkmate.
Checkmate
4598.53 is now a level you should know by heart. Tattooed in your memory.
The origins of this Checkmate level came from assessing history and recent price action. It received its name from the precise short we took on the retest.
Unbeknownst to me at the time of execution, BOJ announced a potential YCC tweak to allow rates over 0.5% - occurring right at the bearish retest of 4598.53.
Hence.. Checkmate.
Here’s a look at how the Yen reacted to the news:
Revisiting this Checkmate level in December also provided the same level of strength on its initial rejection, resulting in a -50pt move down into our 4545.85 level within 2 trading session.
From calling euphoria on the market on 7/19, to BOJ news being the cherry on top one week later, this led to a massive -11% retracement into the fall with the bottom being marked by a key level we traded in one of my favorite ranges (4078-4148.95) - 4110.75.
Checkmate 2.0
Now we have a sibling level for Checkmate, meet Checkmate 2.0 (4778.08).
This is a recent level we’ve used to catch downside during the last week of December. This will now be a key level to watch for the rest of the year. Initially labeled “temporary, gauge strength,” this has now officially been added to my list of levels that provide solidity.
It was a great year trading indices. To keep this publication short, I’m only going to cover $SPX.
In all honesty, at the beginning of 2023, I did not expect an ATH test on any of the indices. But once we bottomed out at the end of October, I was swift in playing the upside towards the EOY, providing a single concluding message - “Santa Claus is coming.”
While I mainly focus on day trading indices rather than swinging, I was able to provide an abundance of bottoms on individual names.
Individual Stocks Recap:
Near the end of 2022, I started calling bottoms on many names that provided phenomenal returns throughout 2023. These were both privately posted in Discord + publicly discussed on YouTube.
$COIN:
On our weekly WL for 12/27/2022, I called for potential bottom on COIN after weeks of observation.
After a couple more weeks of consolidation, COIN started its cycle for 2023. We have now ended the year seeing a high of $187, providing +467% from these lows.
$TSLA:
A bottom was called for TSLA near $100. This was also recapped in a following YouTube session:
Weekly WL provided February 150-160c, resulting in over 10x on calls during the rally. TSLA saw a high of $299, providing almost 200% from the lows.
$DKNG:
This was a major highlight in 2023, provided both publicly and privately via the above YouTube video. With sports betting approval coming in MA in Q1 2023 plus a textbook bottom consolidation structure, this was a no-brainer A+ setup for the year.
DKNG was provided at $15, resulting in a phenomenal +167% rally on the year. This name was also recapped during a “Monthly Inside Candles” series published on X and YouTube.
$CVNA:
Another major highlight of 2023. This all started during my visit to BTC Miami in May ‘23. During my last day there, I spotted a Carvana building and it immediately instilled curiosity in my gut.
As soon as I returned, I decided to analyze CVNA and found high conviction in a squeeze from the lows. Textbook bottom consolidation + accumulation breakouts reflected by its volume provided another A+ setup.
This was another name I shared on X and YouTube.
$MRNA:
I was extremely bearish on MRNA last year; unfortunately, I never executed on this due to my timing being a bit early. My macro target was $64.99 from a massive range breakdown that finally occurred in July/August.
$SE:
Here’s a name I was dead wrong on in 2023.
This was also relatively high conviction in my “Monthly Inside Candles” series that didn’t pan out as I expected. After a few tests of the upper inside candle range, SE failed to break out. Earnings led to a complete break of structure - invalidating any bullish thesis for the year.
There were too many names to mention that I’ve provided analysis and trades on, resulting in massive rallies towards EOY (SNOW, ZS, ENPH, GLD, AVGO, and more).
All information can be found either privately in Discord, on my X/Twitter account, or YouTube. I have over 20 videos on YouTube providing educational content + analysis for you to watch. I highly recommend reviewing them again - it’s great study material.
2023 Macroeconomics
JPow + Fed:
COVID and the resulting monetary policy easily painted the writing on the wall for what was to come in 2022. Please read the 2022 Market Analysis publication for a full breakdown of macroeconomics and the effects.
In 2023, we continued to hike rates through the summer, until JPow finally announced a pause on hikes to gauge how the economy bodes during this time.
Inflation has nearly met the Fed’s target of 2%. 2023 started with inflation at 6.4%, while gradually decreasing to 3.1% during our last release.
The Fed’s goal is to continue adjusting monetary policy until the 2% inflation target is met, while keeping KPIs at equilibrium without tipping the scale, potentially leading to another uptick in inflation.
GDP is an important factor to consider. GDP had massive growth in Q3 in comparison to previous quarters. Although GDP represents healthy economic growth, rapid GDP growth can risk an increase in inflation.
It all comes down to supply/demand.
If prices are the same but production increases → lower unemployment rate → higher demand → higher wages → more spending.
If prices are increasing but production also increases→ higher costs → less demand → higher GDP + inflation.
If prices are increasing but production decreases → slow GDP growth (or stagnant) → higher inflation → higher unemployment → stagflation.
Yields continued to rise into October until a sharp turn towards EOM, likely attributed to a cooling labor market, lower retail sales, and a shift in sentiment on potential rate cuts and a soft landing.
Focusing on a TA perspective, TNX was extremely overextended. Macro fib test/reject and bearish divergences appearing on HTFs.
This sharp reversal in yields led to a phenomenal rally into EOY on both bonds and equities.
DXY, in tandem with yields, topped out in October as well.
Monitoring these names can provide assessments on overall economic health, its pace, and sentiment of its market participants - viewing bonds and equities as safer assets.
VIX
Let’s dive into VIX. Now that we’ve discussed TNX and DXY, we can use VIX to further gauge market direction.
VIX proceeded to pullback in 2023 into sub 16 for a large portion of the year with its final upside test in October.
16.08 one of my key levels for VIX and anything under is risk-on. This was also evident in the recent rallies on BTC + GLD.
Sentiment was clearly risk-on and this was shared via many different angles.
2024 Macroeconomics Outlook
Look, I’m no economist. Regardless of my finance degree and the numerous micro/macroeconomics classes I’ve taken, I’m not here to act like I have a seat on the Fed.
What I do understand is how macroeconomics effect my daily life and the markets I trade. I seldom dive deeply into economic data; however, I understand what the reports indicate. I use present and historical data/patterns to structure my analysis.
What we know is clear: Fed will continue targeting 2% inflation, rate cuts are coming in 2024, Fed needs to carefully adjust monetary policy without tipping the scales too far and risk uptick in inflation once again.. or a recession.. or even worse - stagflation.
How do I incorporate this into my trading? I just solely focus on the charts. Using key economic indicators via TNX, DXY, TLT, VIX, are plentiful to derive an analysis from.
Honestly, I don’t put much weight on macro aside from knowing what’s happening and how it may affect the day. The charts will always provide you with every ounce of info necessary to analyze and execute.
Will we experience a rebound in inflation? Will we experience stagflation? None of the above? I’m not sure yet. What I will be more sure of is the technical outlook.
With that, let’s get into my outlook from both a technical and macro perspective.
The data presented throughout this publication are extracted from direct sources of recent reports, FRED, BLS, and more. Even if you’re not adamant about focusing on macro, the goal here is to provide awareness and to engage the critical thinking aspect of your brain to form your own independent analysis.
Of course, anything I provide here is strictly for educational purposes and to share my own ideas derived from the data.
2024 Market Outlook
Welcome to the Year of the Dragon. In Chinese culture, the Dragon year is the most sought out of the zodiac. Fun fact: more babies (in Chinese culture) are born in Dragon years than any other animal year on the zodiac. I have a good feeling about this year. My son’s due date is in May, we just had a phenomenal first week of 2024 with trading.
It’s a year that represents prosperity, ambition, and good luck.
十分有钱，十分健康，十分幸福
Anyways.. moving on.
We know the importance of the Fed’s job to balance monetary policy without causing any unwanted fluctuations.
As markets are cyclical, the same goes for human behavior. But has the Fed learned from their prior mistakes?
Let’s dive into the 1960s-1970s & the 2008 financial crisis.
*Just kidding about 2008. I was initially going to dive into it, but I never saw the similarities between 2008 and present day, regardless of how popular the idea was on Twitter for the past three years. Very different times.
1960s-1970s
We’re going to revisit this Fractal v1.0, originally published in 2020, projecting what I expected with SPY and my ATH expectations. Discord members can view the full analysis by clicking this link here.
This was a prescient call, with my $355 target being met within 3 months (June - September) of publication followed by a heavy retrace back to $319, about -10% downside within the same month.
DKing, who tf cares? What’s the point of sharing something you posted almost 4 years ago?
Well, we’re actually going to revisit this era from a macroeconomic perspective to discuss some specific aspects that may bear similarities to our current monetary policy.
After we completed this analysis, I stopped paying attention to this era for quite some time, even during my 2022 publication.
In 1966, GDP was expanding, unemployment remained low, and inflation became a problem. Due to the heavy involvement in the Vietnam war, government expenditure was extremely high as well.
The rest of the events of this period are covered above.
Of course, with the rise in inflation, the Fed stepped in by hiking rates to further cool inflation. The infamous Credit Crunch of 1966 also occurred, where the tightening monetary policy led to challenges faced by business and individuals, higher borrowing costs, falling bond prices (obviously as it’s inversely correlated to rates), and negative effects on the credit market.
All sound familiar?
Now if you remember the Fractal v2.0 analysis that was provided for 2022, both of these eras have similarities. Both of these eras (60-70s, 80-90s) provided eerily similar results on the technical side of the market.
You’ll notice the retracement in 1966 also lined up with the .5 fib, as did the late 80s pullback for my 3500-3600 target.
This begs the question: Are we still following Fractal v2.0 or have we deviated from it? In fact, now that I’ve spent time revisiting the original Fractal v1.0 from 2020, I don’t think we ever truly deviated or even completed that fractal.
Referring back to my 2022 Market Analysis, I provided the possibility of a Fractal v3.0 (1994+), which compares present time to the millennial boom, right after the pullback.
The below chart represents the Fractal v2.0, 1960-70s, and present day - respectively.
Now that we have completed the initial fractals, I do think we are starting to deviate a bit from Fractal v2.0. From a technical perspective, 2022-2023 looks eerily similar to the 60-70s era moreso than the continuation of Fractal v2.0.
From a macro perspective, we are not sharing deep similarities with the 1991-1995 era. The 90s era recovered relatively quickly from its short recession and economic factors were less similar.
However, diving into the 60-70s paints a different picture.
Below is a chart of the unemployment rate, Federal Funds rate, and inflation rates for that period.
Below is the same data, but more recent.
Throughout history, you may notice the inverse correlations between unemployment rates vs interest rates/inflation (aka Phillips Curve). During the stagflation of the 70s, the Phillips Curve theory came into question as the inverse correlation failed - more on stagflation later.
Based on the data provided, we can see recessions appear when rates and inflation peak, while unemployment starts to bottom out.
Within a decade, we experienced two recessions in the 70s. Below is the set of data for relevance.
Interest Rates (Federal Funds Rate):
1967: 4.38%
1968: 5.12%
1969: 5.93%
1970: 5.84%
1971: 4.29%
1972: 3.83%
1973: 6.43%
1974: 11.15%
1975: 8.53%
Unemployment Rates:
1967: 3.8%
1968: 3.6%
1969: 3.5%
1970: 4.94%
1971: 5.94%
1972: 5.6%
1973: 4.9%
1974: 5.6%
1975: 8.5%
Inflation (Consumer Price Index, CPI):
1967: 3.07%
1968: 4.27%
1969: 5.46%
1970: 5.84%
1971: 4.29%
1972: 3.27%
1973: 6.18%
1974: 11.05%
1975: 9.14%
Within this period, the Fed adjusted monetary policy that included both rate hikes and cuts (a bit of back and forth). The difference between this period vs now is economic theory. Traditionally, Keynesian (John Keynes) economic theory held precedence by using government intervention and fiscal policy to manage demand. However, inflation and unemployment became uncontrollable under Arthur Burns which eventually led the Fed to reevaluate the adequacy of Keynesian theory. In addition, the Oil Crisis of 1973 added fuel (pun intended) to the fire. There’s a traditional thinking that a recession is required to battle high inflation - hence the recession fears we’ve seen the past few years.
In present day, the Fed focuses on monetary policy with an inflation targeting regime. This involves gauging money supply, inflation, interest rates, and employment.
Side note: One must remember that lately, the Fed has done numerous “adjustments” to data and even modified the way inflation is measured (now calculated based on one year instead of two). Gotta ask yourself, why?
Stagflation
Stagflation occurs when economic growth is stagnant, inflation is high, and unemployment is high - it’s worse than a recession. Recessions consist of a decrease in GDP growth for consecutive quarters and doesn’t necessarily require inflation to be high. Recessions can occur at various levels of inflation.
The stagflation in the 1970s was.. well, a shit show. Not only did we experience oil shocks, we experienced lower productivity and higher prices (inevitably demanding higher wages and higher labor costs).
In 2022, the economy reflected similarities to this period; however, GDP has seen a steady rebound as of late with massive growth in Q3 2023. Refer to data chart provided in “2023 Macroeconomics” section.
Recent Economic Data
As I’m writing this section, we’ve now completed the first trading week of 2024.
WCI
First dataset I’d like to review is the WCI (World Container Index). As the Fed has announced rate cuts for 2024, it’s important to look at different datasets such as the WCI. Personally, I don’t think the inflation battle has ended and we’re likely to see a rebound on it. I’ll dive more into this in my final conclusive section.
The WCI tracks changes in freight rates. I don’t think you need a finance degree to figure out why this is important.
Higher freight rates → higher shipping costs → elevated challenges globally → risks to supply chain.
61% increase is extremely high. This increase is likely attributed to the recent Red Sea attacks (might want to keep an eye on freight stocks). Although this news may be unknown to most, this increase will have a large impact on the global supply chain and possibly future inflation reports.
This disruption has also caused a recent rise in oil.
Employment
Labor market has been cooling recently with less openings and less hires. It may seem companies are focusing on less hires vs more job cuts.
The “Quits” rate, which represents people voluntarily leaving their jobs, also declined. This could be a sign of complacency in the job market where people are unable to find new or better jobs.
Even with the cooling market, demand is still strong. The recent NFP report increased by 216,000 vs the 170,000 expected. Although, they have been revising numbers lower as well.
In December, average hourly earnings increased by .4% while seeing a 4.1% over the last 12 months.
What’s interesting to note is this:
Full-time workers plunge 1.5 million in one month to lowest since February 2023
Part-time workers soar 762K to the highest on record
Multiple jobholders hit all time high - 8.565MM
It’s starting to seem we may be walking on thin ice. This now all ties in to the rest of the macroeconomic data we’ve discussed throughout this publication.
Cooling job markets typically lead to higher unemployment, which means less spending and declining GDP. The fact that full-time workers plunged while multiple jobholders hit all time high may show signs of distress within the labor market. Kind of feels like the times your “Check Engine” light goes off but you continue to ignore it until it becomes a real problem.
Inflation
The next CPI report is on Jan 11 with Core CPI expected to come in lower.
Below are visuals of the data.
We witnessed a slight increase in most categories in the recent report with a decline in energy.
Referring back to our WCI section - if this isn’t resolved soon, we can likely expect another uptick in energy data during future CPI reports.
There is some good data to share, which is wage growth vs inflation.
In the below chart, you’ll notice wage growth outpacing inflation now. This is another type of data one may want to pay attention to when gauging employment vs inflation.
Honestly, as a normal person, it doesn’t really feel inflation has cooled down that much.. has it? Things are still pretty expensive. Food is expensive. Restaurants are expensive. Services have increased all across the board as I’ve observed. The recent employment report signifying the increase in multiple job holders and decrease in full-time employees may also represent that same sentiment.
It’s ironic to see how 2020 consisted of people AVOIDING jobs due to stim packs and now.. people are looking for multiple jobs. Just something to think about.
Although, this battle for inflation (or disinflation) may also show that managing a labor market may not necessarily be a priority. Of course, the short recession due to the recent pandemic can be attributed to challenges on the supply side while consumer demand was still high.
Personal Consumption Expenditures
PCE, which measures expenditures made by individuals and households, has seen a steady decline since its highs in 2021. There was a slight uptick in the last report, but still under target. This is another measure of inflation used by the Fed and they’re forecasting lower in 2024.
US Deficit
As you continue to read this publication, I want you to keep the ‘60-70s era in the back of your mind.
From the Vietnam War to the Yom Kippur war (which led to the Oil Shock/embargo of 1973, we now have the Ukraine/Russia War and Hamas/Israel War in present day.
Although our involvement now is more indirect, let’s focus on the effects of the US deficit.
The last time the US was at a surplus was in 2001. We’ve sent over $60 billion to Ukraine since the start of the war and $14 billion to Israel. Of course, aid in war is not a donation. These will be paid back as they decide on compensation plans - nothing that I will dive into.
The above data was quite interesting to me - a decrease in revenue from individual income taxes was the largest contributor.
Moving on to federal debt, we have seen all time highs. Of course, 2023 included the debt ceiling fiasco and Fitch’s downgrade on US credit.
Recent rate hikes affect debt as well. 16% of federal spending was allocated towards servicing debt due to the amount of interest.
Now on to credit card debt:
This is a bit insane to see, but it makes sense. Before I go any further, please understand that you should never hold credit card debt. I never make purchases with cash as there are many advantages with “churning” and using credit cards for purchases; however, don’t spend more than you can afford. Pay off your balances in time, manage your CCs.
Anyway.. here’s my opinion/assessment. I believe the QE of 2020 led to people spending more than they had, especially since no one wanted to work. Everyone used their stim packs to purchase “wants” vs “needs.” Add in the immense amount of job cuts we experienced, the rise in popularity of “buy now, pay later” platforms ($AFRM/$UPST), and interest rate hikes - these factors became a recipe for disaster for household credit card debt. Also, interest rate hikes = higher APR on your CC balances. You can even use these payment plans on a cup of Starbucks. Absolute insanity.
I’m not sure how any of this will unfold yet, I’m merely presenting the data to you. I don’t think the federal debt and household credit card debt are major concerns yet, but it’s good to view it from a personal perspective and how it may affect lives overall. It is now time for you to put on your “critical thinking” hat and extrapolate this data with everything else we’ve discussed (employment, inflation, rates, etc). All I know is - it’s not favorable.
FYI - I didn’t even dive into the student loan repayments. $132 billion in student loan forgiveness sounds great, but it’s a fraction of the total student loan debt nearing $2 trillion. Something to think about when you’re reviewing all of the above.
BRICS (USD + DXY)
BRICS includes Brazil, Russia, India, China, South Africa, and now newly added.. Saudi Arabia, UAE, Egypt, Iran, and Ethiopia.
BRICS is something we may need to keep an eye on. Their entire campaign on “de-dollarization” will inevitably have a global impact, if succeeded.
If you’re unfamiliar, the whole concept of de-dollarization is their movement away from dependency on the US dollar. They’re aiming to form a unified currency.
Hold on.. this list includes some of the largest oil producers in the world. Oil shocks of 1970s becoming imminent again if de-dollarization succeeds?
For data purposes, 90% of foreign exchange transactions and 60% of global trade involve the US dollar.
In reality, I’m not sure if they can even succeed with this de-dollarization. Probability seems extremely low due to the impacts it will have globally.
How will this affect the market if they succeed? Honestly, I’m not too sure yet. As DXY typically has an inverse correlation with equities, you might expect a bullish market (why park your assets in cash if it’s being devalued?).
However, this will provide high uncertainty with a major global impact on all levels. IMO, this would be extremely bearish for equities and would provide heavy volatility and uncertainty for some time, similarly to the Nixon Shock of 1971 when it was declared that the dollar was no longer backed by gold.
As far as DXY goes, I expect a test into the 114-118 range in the first half of the year before pulling back further into the bottom of the range and possibly under 100. We are currently riding the wave in this macro range from the highs/lows of ‘08-’11.
It may be a good time to take a break from reading this. As I continue to draft this publication, my brain gets fried as well!
Take this moment to check out the rest of my socials and content:
Yield Curve Inversion (T10Y2Y)
Here’s a topic I wanted to dive into a bit.
Typically, the yield curve trends upward with long term maturity bonds (10yr) providing higher yield than short term maturity bonds (2yr).
Yield curve inversion occurs when long term maturity bonds are providing less yield than short term maturity bonds.
Why would I invest in a 10yr bond if I can make more by investing in a 2yr bond?
Yield curve inversions have historically preceded recessions. Banks also typically borrow at short term rates while lending at long term rates, which can cause challenges for profitability during yield curve inversions.
Remember TLT/TNX relationships.
In the below chart, you’ll see the shaded areas represent recessions. Orange overlay is $SPX.
Here is a look at the inversion before the recession following the Dotcom Bubble.
Here is a look at the inversion before the recession following the ‘07-‘08 Housing Bubble/GFC.
This is present day:
Based on the historical data presented, we see that the market experiences further downside after this ratio climbs back to positive.
Of course, other economic aspects, such as monetary policy & geopolitics, can affect how equities react - but this is an additional dataset to watch for the coming year.
Crouching Tiger, Hidden Dragon Fractal
“暗石疑藏虎，盤根似臥龍”
This is from a poem by Yu Xin which means: “behind the rock in the dark probably hides a tiger, and the coiling giant root resembles a crouching dragon.”
In the idiom, the tiger and dragon represent people of great talent that are hidden. But my interpretation of it for this fractal analysis leans more towards “there’s more than meets the eye” and we must tread carefully this year.
‘60-70s vs ‘80-90s
As we’ve discussed before, both periods had similarities to the resulting technicals of the market in present day.
Even the macroeconomics lined up with the technicals which provided a prescient call of 3500-3600 target during the 2022 bear market (Fractal v2.0).
Based on everything I’ve discussed, I think either of these fractals post-retracement can play out depending on what the future holds for economic policies and our battle with inflation.
However, I’m leaning towards the continuation of Fractal v1.0 (from 2020) and will be focusing on projections based on 1965+.
Let’s take a look at this first chart where I copied the bar pattern of 1966 and pasted it to current day:
The recent low in October was a similar retest to the bottom of 1968.
To further project where we’re currently trading, the recent high at EOY is where we may be on the July high of 1968.
That being said, I expect a test of 4500 - 4600 as my main target in the initial pullback of 2024 before rallying to new ATHs.
I expect more rangebound trading this year with breaks of ATH then reversion to mean. The current expected range on SPX for 2024 at the start of the year is 5540.45/3999.21.
I believe we may see a peak ATH test on of 5540.45 - 5640.88; however, my main upside target is 5100-5200 before seeing a larger pullback that may be attributed to further macroeconomic/geopolitical changes.
I don’t think a recession is off the table. Hell, I don’t think stagflation is off the table (although extremely low probability).
The above chart is my final projection for 2024.
Here is the Weekly Plan provided for the week of 1/2/2024:
Brenner Cycles
Just a note I wanted to share. Won’t dive deep, this chart is straightforward.
VIX
I do believe VIX is bottoming out at these lows and 16.08 will be an important level to watch on its next rally, coinciding with the expected pullbacks this year.
Pay close attention to other assets such as BTC (halving this year), DXY, GLD, and everything else we discussed in this publication.
Final Concluding Thoughts
“Crouching Tiger, Hidden Dragon” Fractal
With the eerily similar aspects of both macroeconomics, geopolitics, and technicals to the 1960-1970s era, I have revisited my original 2020 Fractal v1.0 and extrapolated the data to provide the “Crouching Tiger, Hidden Dragon” fractal for 2024.
The economy is in a state we haven’t experienced for quite some time. Regardless of the macro, I aim to execute based on what the technicals provide.
As a reminder, I trade day by day, level by level. These in-depth analyses are conducted to provide myself a macro sense of what I personally expect based on the data presented and my expertise. If I’m wrong, I’m quick to adjust. I don’t trade with bias.
Upside targets: 5100-5200/5500-5600 max
Downside targets: Initial pullback from start of year into 4500-4600, max low 4000
As mentioned earlier, I expect 2024 to trade in an extremely wide range, not one directional.
In terms of macroeconomics, I expect inflation to rebound and we’ll need to keep a close eye on developments in both economics and geopolitics for the rest of the year. Remember, this is also election year, expect volatility. Again, I’m not economist, I simply stay cognizant of the data.
Thank you
for reading this extremely long analysis for 2024. I’ve covered a plethora of topics and angles. At the end of the day, regardless of my analysis and its outcomes, the main purpose of this publication is to provide education via deep analytical work.
I had so much more to dive into, including projections on individual names. But I’m about ~30 hours deep in drafting this publication so I will save the rest for another time (via X/Twitter or YouTube sessions - all public).
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Edit: Cheers to 2024. Wishing all of you a healthy and prosperous Dragon year.
Thank you for the detailed analysis
Brilliant analysis!