Stocks bounced sharply higher once support was tested and held, further supported by oversold conditions and relatively favorable inflation reports. Internal measuring tools moved sharply in the right direction. Broader participation and follow-through are now needed.

The Catastrophic Stop model increased slightly to 65.7% from 60.7% last week. Internal measures (price-related indicators) are bullish, and External measures (indicators calling the operating environment) are neutral.

Worries over fiscal discipline, immigration policies, the recent strong employment report, and several other issues drove the 10-year U.S. Treasury yield above 4.80%. When the Fed started lowering interest rates on 9.18.24, the 10-year yield stood at 3.70%. Who’s missing what?

The Catastrophic Stop model declined to 60.7% from 67.9% last week as the MSCI ACWI Breadth Factor reverted to a sell signal. The Internal Composite is bullish, and the External Composite is neutral.

The DH Smart Value Portfolio continues to invest in companies producing excess returns through positive economic profitability, supported by solid balance sheets (quality), significant cash generation (profitability), and trading with considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future.

The oft-discussed price volatility, in both directions, came to the forefront as 2024 ended and 2025 began. With the ongoing global and domestic political backdrop, “tariffs, taxes, inflation,” negative non-confirmations, and interest rates, the odds favor it continues.  

The Catastrophic Stop model combines time-tested, objective indicators designed to identify high-risk periods for the equity and equity-related fixed-income markets. The model held steady in December and entered January with a fully invested allocation recommendation.

The Catastrophic Stop model combines time-tested, objective indicators designed to identify high-risk periods for the equity market. The model held steady in December and entered January with a fully invested equity allocation recommendation. We will raise cash if our models shift to bearish levels (below 40% for two consecutive days).

The Catastrophic Stop model combines time-tested, objective indicators designed to identify high-risk periods for the equity market. The model (Figure 1) held steady in December and entered January with a fully invested equity allocation recommendation. If our models shift to bearish levels (below 40% for two consecutive days), we will raise cash.

The Catastrophic Stop model improved to 67.9% from 60.7% last week due to the MSCI ACWI Breadth Factor shifting to positive. The Internal Composite is bullish, and the External Composite is neutral.

The Catastrophic Stop model held steady at 60.7%, the same reading as last week. The Internal Composite is bullish, and the External Composite is neutral.

The Catastrophic Stop model declined to 60.7% from 72.9% last week due to High-Yield and Emerging Market bond breadth shifting from bullish to neutral on 12-18-2024. The Internal Composite is bullish, and the External Composite is neutral.

With the Catastrophic Stop Loss Model still favorably positioned (when it reverses and recommends increasing cash, we will follow) and favorable seasonals into year-end, the S&P 500’s price trend remains intact. However, many internal measuring tools are vulnerable.

The Catastrophic Stop model increased to 72.9% from 67.9% last week due to the sentiment composite shifting from bearish to neutral. The Internal Composite is bullish, and the External Composite is neutral.

During Q324, with the S&P 500 near 5700, we highlighted 5900 and 6100 price targets. SPX printed 6099.97 last week. The Catastrophic Stop model remains bullish, but resistance, negative A/D Line divergences again, and a lot of bullishness suggest volatility in the next few weeks.

The Catastrophic Stop model improved to 67.9% from 60.7% last week. The Internal Composite is bullish, and the External Composite is neutral.

In November, domestic equity market indices—including capitalization, equal-weight, small, mid-, large cap, value, and growth—closed higher. With complacency (excessive optimism) building and a potentially sloppy start to 2025, price momentum is supportive until the month’s end.

We continue to invest in companies producing excess returns through positive economic profitability, supported by solid balance sheets, significant cash generation, & trading with considerable margins of safety. We believe these factors will continue to provide rational opportunities for the foreseeable future.

The Catastrophic Stop model is unchanged from last week’s level of 60.7%. The Internal Composite is bullish, and the External Composite is neutral.

The Catastrophic Stop model combines time-tested, objective indicators designed to identify high-risk periods for the equity market. The model held steady in November and entered December with a fully invested equity allocation recommendation. If our models shift to bearish levels (below 40% for two consecutive days), we will raise cash.