Wrapping Up a Holiday Week
Hey everyone, welcome to the Weekly Wrap-Up. It’s been a short and fragmented week with the New Year’s holiday right in the middle of the week, but there’s still plenty to talk about as we head into the first full trading week of 2025. Let’s dive in.
S&P 500: Early Tests of Support
The S&P 500 opened the year at 5949.25 and has been testing its early support levels. The market’s been playing with that the past 2 days. It dipped down to 5911 area a couple of times but managed to hold above it.
For me, that 5950 area is key. If we can hold above it, that’ll keep things positive.
Gold and Commodities: Unusual Patterns and Key Levels
Gold has had a strong run, even moving in tandem with the U.S. dollar recently. That’s “in-step” kind of movement is not typical, but it’s not unheard of either.
Usually gold and the dollar will go opposite each other. Sometimes gold attaches itself to interest rates or to crude oil, moving with those.
With the rally gold has had the past couple of weeks, one thing I’ve noticed is that silver has been lagging.
I think as long as we can get gold above about $2,670, silver above $30.50, and ideally I’d really like to see copper above $4.10…
As long as we can see those prices, we could see a stronger move up in gold.
Gold hit tested 2800 some weeks ago and pulled back, then tested 2700 and pulled back again.
So right now, let’s see if we can’t get back above 2670 before things start moving higher.
If we can break those levels, we could see more strength across the board in the metals.
Early January: Patience is Key
I think we need to be a little patience with the indexes right now.
We’re at the very beginning of the year, kind of in a “window” where we’re switching from one presidential administration to another. So we just need to be patient and see how this market does.
It wouldn’t surprise me if we do another bit of a pullback in the S&P again. We had a bit of a pullback while I was on vacation over the past week or so, but it’s trying to hold up right now.
It wouldn’t surprise me if wepull this thing back down to the 5850 to the 5820 area before the market catches its breath, flips around and takes off again. We kind of needed a bit of a correction anyway.
Just be cautious. This week was a short week and so far this year we’ve only had 2 days of trading.
Next week we have the jobs numbers coming out Friday along with the Fed minutes.
I’ll be in Florida next week with Tom Busby teaching a futures class, so it might be a little quiet on my front in terms of trading.
Once we see how the first five trading days of the year goes.
If we can stay above the open in those first five days, we will probably lean more to the positive side. If not, we’ll have to lean more to the negative side.
In the meantime, I’m going to sit on my hands and be patient.
Crude Oil: Momentum and Resistance
Crude oil has been looking pretty strong. It’s currently sitting at $74 after reclaiming $72.50. The next test is at $75, and beyond that, we’re looking at resistance around $77 to $77.50.
If you go back a couple of years, crude opened around 80.30, so we’re still down below that.
Longer term, crude really needs to break above the $87 – $90 range to get some steam and get rolling.
If we go back to the last Trump administration’s “Drill Baby, Drill!”, crude was down at $35, so it woudln’t surprise me if we get a nice little rally into March… Maybe even June or July.
But the drillers are a little reluctant to “Drill Baby, Drill!” because, you know, they like money too, so lower supply keeps prices higher and makes them money.
So I think they’re going to be a little more cautious this time around.
Closing Thoughts
To sum it up: patience is the name of the game right now. With a fragmented holiday week behind us and the first full trading week still ahead of us, it’s all about watching those key levels and staying flexible.
Let’s see how the market shapes up next week. Thanks for tuning in, and have a great weekend.
— Geof Smith
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