Market is consolidating with downward pressure, but Santa Claus rally expected soon

From Investing.com: 2024-12-16 02:11:00

The market is experiencing a consolidation phase due to annual portfolio rebalancing, causing downward pressure on risk assets. Despite a short-term correction, a Santa Claus rally is expected soon. Technical indicators suggest potential further downside before a rally into year-end. Optimism is high, but risks remain with a new administration and policy changes in 2025. Small business owners’ optimism is surging post-Trump’s election, with expectations for tax cuts, deregulation, and economic growth. This positive sentiment is reflected in future sales and employment expectations, potentially boosting economic growth and CapEx. However, risks remain, including trade policies and immigration restrictions.

Portfolio rebalancing is mostly complete, with potential short-term market volatility before the Santa Claus rally. To protect investment capital, tighten stop-loss levels, hedge portfolios, and rebalance to target weightings. Realistic objectives and risk controls are essential for navigating the market uncertainty in 2025. Stay focused on preserving capital and managing risks for long-term investment success.



Read more at Investing.com: First Comes the Fed, Then Santa: How We Are Trading the Markets Into Year-End