Where Does This Stock Market Rally Stop?
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The markets just keep trending higher across the board even with negative breadth on some markets so the question is when does this stock market rally stop? We’re going to chat about that a bit this week like we always do in the broad market overview and spend a little more time looking at sectors in the show.
Then we’re going to go back over some recent ideas I’ve talked about on this show the last 3-4 months and do some check-ups/quick notes. Names like $VFC, $AAP, $BA, $INTC, $SCHW and a few others.
Some photos on the way to the office this morning to record the podcast/show. The final photo is where we’ll be hosting the 2025 Investor Retreat in Dorado, Puerto Rico.
This week we’ll talk about:
- Broad Market Update
- Mag 7 Crowded Once Again
- Japan & Buybacks
- Review of Some Prior Companies from The Show
- Weekly Q&A
Now on Spotify
The Broad Market: Stock Market Sentiment
The markets won’t stop up here and there are a few things I want to get through this week to talk about.
The first is this – I still don’t think we’re going to see significant selling until 2025 maybe mid to late January.
Second – risk premium (protection) is relatively cheap right now and the broad market short idea is something I am waiting on given the cost of the trade.
Finally, the rate cut next week has priced in a 98.5% certainty by the markets so if they don’t cut for any reason then maybe there’s a shock. Not an event I am trading but something to watch.
For those new here let me give you some context. I started out on a futures desk way back in 2009 so learning trend-trading, market-timing and technicals was required and I was fortunate to have great mentors.
Technicals can help to tell you two things: When and how far.
Sure, there is a lot more that goes into an investment but for those that understand certain technical items, at times, it becomes the only thing needed.
Moving averages are not a big deal for me nor are other indicators.
What does matter to me are riding the overall trend but also being cautious when things get a bit frothy. That, plus watching how the higher time frames play out and then finally key levels. I know this is subjective to many and it’s not my goal to convince you this is the way it’s just the way for me since 2009.
The SP500 here is a little frothy and something where I want to watch into January and beyond especially given the crowded Mag 7/momentum trade (not what we do).
The Russell 2000 is a name I used to trade religiously back in 2010-2015 through the futures but not so much today. It’s important to me now given the cycle we’re in and I do think we’re going to check back a bit into January to $210s or so.
To be clear, that is not a trade idea I am putting on, just my views. I am interested in some of the names within the index to track for 2025 so watching this as a broad market tool for them is something I always do.
The Russell 2000 is a name I used to trade religiously back in 2010-2015 through the futures but not so much today. It’s important to me now given the cycle we’re in and I do think we’re going to check back a bit into January to $210s or so.
To be clear, that is not a trade idea I am putting on, just my views. I am interested in some of the names within the index to track for 2025 so watching this as a broad market tool for them is something I always do.
This is the Chairman & Founder of Interactive Brokers. He gave some of these comments at the Goldman Sachs Financial Conference on Thursday December 12.
Mag 7 slows a bit in 2025. Don’t get caught holding the bag like some China investors a few months ago.
Click to read the article above.
Buybacks are not a must catalyst when I look at companies to put into the portfolios but it certainly helps as a broad screening tool. Take EOG Resources as an example – the last two years they’ve been buying back stock at record rates.
Japan has been pushing corporate governance reform and that has started to pickup when you look at some of the buybacks.
2024 will be a record year for Japan and buybacks nearly $57B.
For the readers/listeners of this show looking into Japan and some of the ideas there is worth the time for 2025 (at least for me). It’s really hard to ignore some of the valuations they’re given the multiples they’re trading at so we’ll be discussing more on the show as we get into 2025.
Quick Updates on Some Companies We’ve Discussed
This is a “lull period” for the market end of year even with the broad market names rallying but we’re going to cover some of the names from this show.
Final Word.
- No more reports for 2024. New report comes first week of January.
- Webinar on Monday for Subscribers (Link posted on Substack) 8pm EST.
- If you’re a listener of the show and are interested in working with us to manage your investments or wealth please visit the Money Management tab.
- I will be in Dubai in February – anyone wanting to meet up please reach out, I have a few meetings scheduled hence the trip.
- Please share this podcast/show/article if it helps!
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About the Author
Daniel Bustamante is the founder, managing partner, and CIO of Bustamante Capital Management L.L.C., a multi-strategy investment management firm based in San Juan, Puerto Rico. He has over 10 years of experience in the financial industry, specializing in equities, futures, and event-driven trading strategies.
He is also the founder of TheLongVol.com, a blog and newsletter that shares his insights on his investing process, travel, and other private investments. He has been featured in Bloomberg, Arizona Business Journal, Business Insider, Yahoo! Finance, Forbes, Seeking Alpha, and other publications over his career on Wall Street.
