Opportunities Ahead – Avoid Classic New Year Mistake, China And Iran Threats, Bitcoin Rumor

To gain an edge, this is what you need to know today.

Opportunities Ahead But Be Astute

Please click here for a chart of SPDR S&P 500 ETF Trust (ARCA:SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

Plenty of opportunities are ahead in 2024, but you need to be astute as to when to buy, what to buy, and how to buy if you want market beating returns.  
The chart shows that during the Santa Claus rally, the stock market did not hit the top band of the resistance zone. In the very short term, this is a negative.
The chart shows the stock market has pulled back to the low band of the resistance zone. To maintain bullish posture, the stock market needs to not go much below the bottom band of the resistance zone.
There are likely many stops right below the bottom band of the resistance zone.  If the stock market starts dropping, hunt and destroy algorithms will go into action and take out the stops. This is the reason that The Arora Report recommends not placing stops at obvious points.
Historically, after the stops are taken out, there is a bounce. Officially, the period for the Santa Claus rally will end at the close tomorrow.
RSI shown on the chart is on a sell signal, but the pattern is such that it can quickly reverse to a buy signal.
RSI on the chart shows negative divergence. In plain English, this means that RSI and the price are moving differently. This is a negative in the very short term.
In the early trade this morning, there is considerable tax related selling. Historically, such selling is common after a strong year. The reason is that investors did not want to sell in 2023 to avoid paying capital gains taxes for the 2023 tax year.  By selling now, they have successfully postponed paying capital gains tax by one year.
As the year starts, investors are again making the classic mistake that we warned you about late last year. The classic mistake investors make at this time of the year is to act on the following:

2024 year end targets from Wall Street strategists
Sector recommendations from Wall Street strategists

In our 40 years in the markets, a vast majority of the time, Wall Street strategists are wrong. To understand the recent history, consider the following:

Right now, investors are worshiping permabulls and…