The USMAI remains in a Bullish zone, supporting long-term investment

$.SPX(.SPX)$ $.IXIC(.IXIC)$ $.DJI(.DJI)$

The USMAI remains in a Bullish zone, supporting long-term investment strategies, but recent corrections signal weakening momentum. A transition to a Bearish zone is likely within the next few weeks, necessitating caution in both long-term and short-term positions.

Last week's strong buying momentum drove a robust upward movement earlier this week. However, the market closed with a sharp decline as strong employment data and resilient economic indicators reduced the likelihood of future rate cuts. Currently, the market is undergoing a corrective phase.

Starting next week, the weekly trend is expected to enter a bearish zone, transitioning into a downward trend. A rebound is anticipated around late January to early February. In the short term, a sell-side dominant downward movement is likely, and any upward moves are expected to be temporary.

Long-Term Investment Strategy

Trend Zone Characteristics

• Bullish Zone:

  • Uptrend: Strong upward momentum with minor corrections.

  • Correction Trend: Temporary pauses in upward momentum due to increased selling pressure.

  • High returns with relatively lower risk.

Strategic Recommendations

• Position: Buy and Hold

  • Maintain holdings to benefit from upward momentum.

  • Prepare for potential reallocation if the trend shifts to the Bearish zone.

Performance Metrics

• Entry into Bullish Zone: August 25, 2024

• Duration in Bullish Zone: 19 weeks

• Cumulative Return: +6.0%

For Long-Term Investors

• Continue a Buy and Hold position while monitoring for potential entry into the Bearish zone.

• Adjust strategies if the trend transitions downward.

Given the high volatility and probable trend reversal, both long-term and short-term investors should remain cautious, closely monitoring market movements and broader economic indicators.