Dan Nathan, Guy Adami, and Carter Worth discuss topics such as adding futures to trading strategies, the implications of the Microsoft and OpenAI partnership, strategies for buying gold, bullish reversals in the market, analysis of recent stock performance, and the potential levels the S&P 500 may reach by 2024.
Small-cap stocks are showing bearish to bullish reversals, indicating potential buying opportunities.
Lower yields, a weaker dollar, and declining crude oil prices are creating a positive environment for the stock market.
Deep dives
Bearish to Bullish Reversals in Small Caps
There are several small-cap stocks that have shown bearish to bullish reversals, indicating a potential bottoming and a change in direction. Stocks like Trip, Yeti, and others have experienced significant downturns but are now basing and bottoming, showing signs of strength. This trend is not limited to a specific sector, as stocks in various industries have exhibited similar patterns. Overall, these bearish to bullish reversals suggest potential buying opportunities in small-cap stocks.
Yields, Dollar, and Crude Coming Down
Yields, the dollar, and crude oil prices have all shown signs of moving lower, which can have a positive impact on the stock market. Lower yields and a weaker dollar can provide tailwinds for equities, while a decline in crude oil prices can benefit the economy and consumer spending. These factors, combined with the recent shift in the Federal Reserve's tone towards rate cuts, have contributed to the market's upward momentum. However, it's important to consider potential risks, such as a slowdown in consumer spending and the impact of geopolitical events.
Gold Shows Potential for Breakout
Gold has been consolidating and forming a potential bottoming pattern after its significant rally in previous years. The charts show that gold has repeatedly returned to the same level, exhibiting tension between bullish and bearish forces. With yields and the dollar expected to decline, gold could benefit from a favorable environment. While the path to $5,000 per ounce, as projected by some analysts, may not be a straight line, there is a possibility of a breakout to new highs in the coming months.
Uncertainty and Potential Downside Risks
Despite the current market strength, there are potential downside risks and uncertainties that could impact the stock market in the future. Factors such as a slowdown in consumer spending, deteriorating leading economic indicators, and higher market volatility could lead to a significant pullback. It's important to consider that bad news might start to have a negative impact on the market, as well as the potential for lower rates to be perceived as negative news. The year 2024 remains uncertain, with various factors, including geopolitical events, playing a role in determining market outcomes.