S&P 500 Outlook for 2024

US Stock Market Forecast Video for 2024

We have been bullish overall, but there was a situation for about 4 months where the market started falling apart. We fell right into significant support, and then turned around as traders started to price in the idea of the Federal Reserve having to loosen monetary policy. Guess what? They have since acquiesced to the demands of Wall Street, which is what they do typically. I suspect this is what 2024 is going to look like as well.

Federal Reserve and Other Central Banks

The Federal Reserve of course will be front and center, and with its December meeting, it had to suddenly see quite a few interest rate cuts during 2024 on the so-called “dot plot.” This has Wall Street celebrating, and the market has gone straight up in the air since then as well. That being said, Wall Street has learned that it can bully the Federal Reserve into monetary policy via the bond market, and therefore that’s exactly what we are seeing.

That being said, we do head into a recession in the United States, historically speaking, when the Federal Reserve starts to cut interest rates, that’s the beginning of something rather ugly. It is because of this that I expect some type of massive plunge in 2024. This is set up as a repeat of several other years where we have seen Wall Street throw a tantrum, and then the Federal Reserve steps in to start buying things.

I anticipate that not only will the Federal Reserve have to “normalize monetary policy” but will have to come in and start easing monetary policy yet again. Quite frankly, at the end of the day it’s the only playbook that the Federal Reserve or other central banks seem to have. It is because of this that I anticipate a lot of headaches this coming year.

Technical Analysis

The technical analysis in this market is obviously very bullish. The 4800 level is an area that has been extreme resistance previously, but as we raced toward it at the end of 2023, I think it’s very likely that we could see a little bit of a “double top” in that area as traders will eventually have to take profit. That being said, there are plenty of people underneath it who would be willing to buy stocks, and therefore I would be very interested in this market near the 4500 level, and then again at the 4200 level, assuming that we even get down there.

I expect volatility is probably going to get worse this year, not better. This would also come into play if we suddenly had a central banks around the world shifting monetary policy, which is generally good for stocks, but if they find themselves having to do so in an emergency manner, which I suspect very well could be, there will have to be some type of plunge.

This is going to be one of the situations where you will know it when you see it, and with a 10% loss, there are probably some investment opportunities in this market. Pay attention to the US dollar because it does have a bit of a negative correlation as well, right along with interest rates. If both of those continue to drop in the United States, that is like rocket fuel for stocks eventually, but any type of panic will cause Wall Street to start selling immediately.