By Ron William, CFTe, MSTA

“Fly me to the moon” & back!

Review FSC Market Forecast “Navigating volatility in 2024” for in-depth analysis.

Welcome to 2024! – the worst new year market reaction since 2000 TMT and return start since 2019 (Figure 1). The market legacy theme song remains Sinatra’s timeless classic, “Fly me to the moon” and now potentially back!

Worst New Year Cross Asset Return in Two Decades

Those lyrics aptly symbolise the ongoing irrational exuberant market, with S&P500 extending its rally from November 2023 lows, rocketing 17%, the largest of its kind in 30-years! Many investors enjoyed the FOMO high-altitude moon flight experience but must now heed astronaut Neil Armstrong’s guidance to always have an exit strategy for your journey back to a more normal earthly gravity force!

The big question now: Are risk assets verging on a behavioural inflection point? As investor sentiment realises their “false dawn” and “market perfectionism,” following the long-awaited dovish Fed pivot. My conviction is that stocks and bonds will see a year of non-consensus in 2024, as featured in CNBC interview.

Indeed, the recent Santa Claus Rally (SCR) is unwinding sharply, as expected, from historically overbought conditions +3STD, with major equity indices now pressured by a strong DeMarkTM momentum exhaustion signal.

Recall the SCR seasonality pattern, which typically extends gains during late December into early New Year, as a prelude to future market performance (Figure 2). However, my previous FSC work (blog, webinar & media interview) - highlighted an alternative scenario proposed by seasonality expert Yale Hirsch, that “if Santa Claus should fail to call, bears may come to Broad and Wall” – signifying the value (Russell 2000) and blue chip (DJI) stocks.

Santa Claus Rally (SCR) Bull & Bear Scenarios

This poetic omen seems to be playing out, driven by the notable 5% reversal in Russell 2000, which previously succumbed to the year-end “dash-for-trash” – mostly in small-cap and low-quality stocks (Figure 3a). Even the infallible Magnificent 7 mega-cap growth tech stocks are underperforming YTD (Figure 3b). This all adds further fragility to what was already a narrow rotation, along with economy-sensitive stocks that will likely feel the pressure as slowing growth impinges on labour markets and corporate margins.

Big Pain in "Broad" Value Stocks & Magnificent 7 Trend Underperforms

From a tactical perspective, the Foundation for the Study of Cycles (FSC) timing model continues to signal asymmetric risk into early Q1 2024, with the S&P500 retracing below its July 2022 peak, near 4610, into price support zones of 4500-4450 and 4370-4340 (Figure 4). Additional cycles project either a new top or further downside pressure from April onwards.

S&P500 Asymmetric Risk Into Q1 2024

Looking at the path of rates, US10Y is already unwinding from oversold conditions -2STD, near key support zone at 4.00-3.85% (Figure 5). This is a historical analogue to its October 2022 decline, which paved the way to the 5% threshold. It also remains in-line with my view for rates to be structurally higher for longer, with rolling waves of volatility.

US 10Y Surge Ahead, With Key Support at 4%

Moreover, behaviourally speaking, the unwinding of the rates and stock action of the past two months (December & November) signals that much of the positive tilt derived from potential rate cuts is already priced in. Also, even as markets expect aggressive rate cuts, a recent University of Michigan sentiment survey shows that consumers still expect inflation to rebound to 4.5%.

Given that this transitionary environment is likely to bring volatility, consider a more prudent barbell strategy with risk asset selectivity, profit taking, and with downside protection. In parallel, it’s naturally wise also to build up a robust defensive play, such as gold, cash, quality bonds and non-correlated portfolio risk. Gold continues to shine, as its latest multi-year breakout above the $2k glass-ceiling targets $2700 (Figure 6).

Gold Major Breakout Targets $2700

Gold’s “transformation period”, is fuelled by broad strength, weighed by FX debasement and recent bouts of safe-haven flows, both from default risk and broadening geopolitical tensions. Join the FSC Market Forecast 2024 free online event next week, 9-11th Jan, 4pm EST, for in-depth analysis from myself and industry peers. Stay alert, until then!

Thank you to all FSC members for all your kind feedback and insightful questions on our FSC blog series. I welcome more interaction on

Ron William, CFTe Bio

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Ron William, CFTe, is a market strategist and educator/mentor with more than 20 years of experience working for leading macro research and institutional firms, producing tactical research and trading strategies. He specializes in global, multi-asset, top-down framework, grounded in behavioural technical analysis, driven by cycles based on the "Roadmap" signature model of veteran market technician Robin Griffiths, published in his book Mapping the Markets.”

Ron also applies a "market & mind" approach at IntensiChi, using the latest techniques in behavioral-risk models and neuroscience sourced from expert groups. He further supplements with mentoring/coaching, trained by the International Coaching Federation (ICF), and teaches a regulatory approved masterclass in Applied Behavioral Science, with investment, private banks and CFA Societies.

Ron's primary work, as part of his current institutional market advisory firm (RWA), acquired global industry recognition as winner of “Best FX Research” in 2020. Financial media programs and industry publications regularly feature his market insights, including “Is the big cycle about to turn?”, predicting the 2020 crash and alerting the “Minsky paradigm” of 2020 H2-2022.

Driven by high-integrity education, Ron serves as part of the education committee of the International Federation of Technical Analysts (IFTA), Development Director at the Foundation of the Study of Cycles (FSC), Head of SAMT’s Geneva Chapter, and an honorary member of ESTA. He is also a visiting lecturer at universities, active guest speaker for the CFA, CAIA and CISI, and senior teacher at colleges offering an accredited diploma in trading and investing.