MarketModel’s Jan 2025 S&P 500 Outlook: Navigating Macro Shifts and Market Signals
MarketModel Trades’ Jan 5, 2025 recap provides an analysis of the S&P 500’s recent movements and future outlook. This Q&A unpacks their strategies, with insights from their analysis and recent market news, to guide investors into the new year.
What is the Current State of Macro Values and S&P 500 Performance?
Macro values are currently showing a slow but steady increase, with expectations to reach an “Improving” status later in January. This improvement is crucial as it typically correlates with rising probabilities for positive market movements. The S&P 500 recently retraced to November levels but has maintained its position above the MAX 5800 support, which has been a consistent floor since early December. This behavior continues to track the May/June analog, a pattern that will be further confirmed once a “green arrow” (indicating improving conditions) appears on the Weekly Chart. This strong annual performance, even with a December dip, highlights the resilience of the market.
What are the Key Scenarios for S&P 500 Movement in Early 2025?
Looking ahead, next week’s data is anticipated to provide stronger confirmation that Macro values are indeed heading higher, a trend that historically leads the S&P 500. Zooming out, Macro had entered a Downgrade phase in Q4, around the start of November near SPX 5800, coinciding with the Trump 2024 Election. Price subsequently rose in November before a December retracement. Macro values bottomed in December and have been gradually rising into 2025. The most favorable scenario for bulls involves one more market dip, allowing Macro to officially reach an “Improving” state, provided the MAX 5800 level holds on close. However, markets do not always present ideal setups; the S&P 500 could recognize the improving Macro trend and move upward without offering another dip. MarketModel’s strategy accounts for both possibilities, advocating for opening long positions at minimum size with the flexibility to scale up if a further dip occurs. Reuters reported on January 14, 2025, that the S&P 500 edged higher in a choppy session as investors gauged inflation data and braced for quarterly earnings, indicating continued volatility and sensitivity to economic indicators in early 2025.
What are the ES Futures Trading Strategies and Key Levels?
In ES Futures, the 5975 Fib level proved to be a significant magnet for dip buyers, attracting activity four times last week and contributing to the formation of a new ES trendline (TL) rising from 5920 to 5940. Maintaining a position above the 5975 Fib level keeps converging TLs at 6100 as potential upside targets. The overarching strategy remains focused on buying dips. Scalpers can identify pullback support at the TL at 5940, with a secondary support point at ES 5850, which corresponds to the MAX 5800 level. If ES successfully retests the 5975 Fib, a quick scalp to 6035 is a possibility; this level represents the midpoint of the FOMC gap down on December 18.
When is the Recommended Time for Investors to Deploy New Capital?
For investors and Registered Investment Advisors (RIAs) looking to deploy new capital, the recommendation is to consider initiating positions on a dip next week. This approach aligns with the overall strategy of buying dips and waiting for opportune entry points. While the market dynamics are being closely monitored, a strategic entry during a pullback can optimize potential returns.
