2025 Technical Outlook: A more Subdued year but still likely positive

REMINDER: My 2025 Technical Outlook is today (1/7) at 2:00 PM Est.

Additionally, please find my Outlook Deck attached HERE.

Conclusions-SPX End of Year Target 6650 but 7000 or a maximum gain to 7350 can’t be ruled out before a reversal lower in 2H

  • I expect 2025 to be a transitional year where SPX strengthens in the first half before giving way to weakness in the back half of the year.  My 2025 SPX end-of year target is 6650 but SPX likely moves higher into end of 1H to 7000 or a maximum of 7350 before backing off in 2H 2025.
  • Industrials, Financials, Technology, and Discretionary look to be sectors to favor into 2025 while Materials, Energy should underperform.  Utilities and REITS also look attractive for further gains in 2025 while Consumer Staples remains the weakest of the Defensive sectors  
  • Both US Dollar and US Treasury yields arguably should start off by weakening in late January into end of 1st Quarter before a bounce into late Summer.   Treasury yields should fall to 3.25 before bottoming and pushing back higher.
  • Long-term Stock market cycles based on the 41-month cycle, made popular by Edward Dewey, show SPX peaking in mid-2025 and weakening in 2026
  • Small-caps are likely to outperform in 2Q-3Q 2025 and likely between March-August as the early year spike in Treasury Yields starts to recede.  Thereafter, I expect Large-caps likely dominate performance
  • Emerging markets are likely to underperform as US Dollar cycle looks to be strong in 1st Half 2025 before weakening.  US should be better than Europe and most of Asia.
  • Growth is preferred over Value with the prospects of Energy likely weakening in 2025 while Large-cap Technology strengthens in early 2025
  • Commodities could be weak in 2025 as Energy prices weigh on the complex and the US Dollar could remain strong into Summer 2025.  Precious Metals are thought to be attractive on 1st Quarter weakness as recent bounce in rates and US Dollar both start to give way and weaken
  • Post Election year cycles suggest that this year might lag the last couple years and could moderate following a strong 2023 and 2024  
  • Sentiment should improve into 2Q 2025 after a volatile 4Q 2024, and seasonality also bodes well for early year Stock market strength, which likely materializes from February into late Summer
  • Cryptocurrencies arguably should weaken in 1Q before rising sharply into Fall 2025
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