US Stock Markets Peak or Continue?

American stock markets are going up as the memorizers say it will fall. American tech stocks continue to rise as the memorizers shorten. Very strange things are happening. Last Friday, the S&P 500 closed at an all-time high. If you remember, Dow Jones showed the same performance last year. There is a Nasdaq that is not at that level right now but is very close. But there are also small stocks that lag behind all this. I will talk about all this. We need to focus on what is happening in China.
Unfortunately, the problems in China are not going away and I am a little scared of this. I've always said it before. On the other hand, big balance sheets are starting to arrive this week. There will be a crazy balance sheet flow in the next 2 - 3 weeks. This week, we will encounter very important balance sheets such as Tesla and Netflix, and the flow of macroeconomic data never ends. When we look at this whole framework, I will try to explain what I expect in the stock market.
QQQ, Nasdaq's largest ETF, started to go with GAP UPs. It's rising incredibly fast. It's currently very close to its all-time high. I think it could probably take its all-time high this week. Because when you get this close to the peak, that peak is usually passed, at least for a while.
The S&P 500 closed at its peak on Friday. So, what triggered the markets, especially on Friday? There is a regular research conducted by the University of Michigan, and Wall Street attaches great importance to this. There, citizens' one-year inflation expectations fell below 3% for the first time and reached 2.9%. By the way, Trueflation, which I follow closely, shows that inflation in America is currently down to 1.85%. 5-year inflation expectations reached 2.8%. Again, this is the lowest figure recorded in a long time. In addition to all this, consumer morale is also good. While it was 67 before, it has now increased to 75.9. Customer sentiment, an indicator that measures how customers feel about the market, markets and the economy, is again very high. The question "What is the current economic situation?" was also given a very high score.
America's morale is good as there is no recession. Because inflation is falling and they see the economy as good. This triggered the markets once again on Friday. The markets have risen by making GAP UPs two days in a row on Thursday and Friday. Memorizers do not present this data to you, then they say that comments are made that I cannot understand, such as stocks increased due to the meeting in Davos. Therefore, the data shows us why the markets are rising.
Of course, the question here is that the market came very quickly and we are at the top right now. Can it go higher from here? Many people rightly wonder if we will experience a sharp retreat from the peak. This is a double peak because we are somewhere around 2021. There are many concerns about whether we will fall backwards from here.
Here, when we look at the performance of the S&P 500 index after its peak, it reached its peak in different years, for example in 1954. It continued to rise after that. It reached its peak in the 1956-58 rally and then continued to rise. It reached its peak in 1963 and continued to rise. It reached its peak in 1967 and continued to rise. It reached its peak in 1968 and continued to rise, at least for a while. It reached its peak in 1973 and continued to rise. It reached its peak in 1980 and continued to rise. It reached its peak in 1987, then rose slightly, then fluctuated a bit. That's where the disaster happened in 2007. It had a double peak, this is the favorite example of memorizers, and then there was a sharp decline. Is this possible? Of course, anything can happen in the stock markets. But I will try to explain why it is not very likely, in my opinion. It peaked again in 2013 and then continued to rise. It peaked in 2020 and then made another tremendous rally. We saw the peak in 2023 and have passed it slightly upwards.
It is very difficult to know whether we will go up or down. But before comparing with 2000 - 2007, it is useful to know this. As you know, the mortgage crisis broke out in America after the sharp rise in 2000 - 2007. Then came the sharp declines. Is there a possibility of such a massive collapse of this type of financial system this year? We can't say zero, but I see it a little low. Because it is certain that we have come to the end of high interest rates, which is the issue that challenges the financial system the most. So will it fall in March, April or May? We are talking about whether it will fall three times or five times. But there we came to the top. Inflation is under control. The FED solved the possible problems on the banks' side by feeding cash through the back window. I'm scared of China, but there's nothing I'm scared of that much. Is America's debt high in the markets right now?
Of course it's high. Will this ever become a problem? It will definitely happen, but it may not happen this year. I think America will not experience such a problem, especially in an election year. So my view is the direction is up but there will be corrections. I can even predict that there will be some pretty harsh corrections. I look at it with some trepidation, especially in February and March. I'm looking forward to April and May with a little more morale. We'll see, of course, we're doing technical analysis like this right now, but it's not possible to predict the future.
As far as I can see right now, but I still predict that we will close 2024 above 2023. But I'm not as super ambitious as last year. Because stocks were very cheap last year. We took most of that cheapness at the beginning of the year. I'm having a hard time finding cheap shares right now. What I found doesn't go away either. I will try to explain it a little later. At the beginning of the year, for example, I predicted that Nasdaq, especially these semiconductors, would slow down a little. Rather, I was saying maybe small stocks and Chinese stocks could go up.
Because they were left far behind. But the performance so far has not been, and it is becoming increasingly difficult to find cheap stocks. That's why my bullish claim this year is not that harsh. But it is not clear. Markets sometimes like to surprise us in such situations and go up, go hard. I still keep my year-end S&P 500 target at 5200. But we are approaching that goal quite quickly now. Let's see what happens next. Of course, there are some developments here that I don't understand. Now the rise of Nasdaq in the last year is 53.28% while Nasdaq is NDX index.
So, the rise of the largest 100 Nasdaq stocks is 53.28%, while S&P 500 is 24.1%. There's nothing wrong with this correlation. But IWM, that is, small stocks, remained very slow. They made a good move towards the end of the year, starting from last October. I predicted that rally would continue this year. I can say that I am disappointed here. This can be seen as a technical correction for now. So on Friday, he turned his head a little bit upwards. But if IWM, that is, small stocks, does not come close to spy during the year, I will be afraid of it. Because the rise needs to spread. So the spread on Nasdaq is going well. The spread in the S&P 500 is doing well. But it is not reflected in small stocks at all. This place scares me a little. On the other hand, I see it as an investment opportunity.
Another issue that surprises me is China. Unfortunately, China is doing very badly. I thought they would recover a little this year, thanks to the government increasing money and reducing interest rates. Otherwise, there are huge problems in the foundations of the Chinese economy. I don't get into them, but I was saying that by making money abundant, the stock markets would recover a little. The truth is, there is no such realization yet.
The largest etf of american tech stocks is QQQ. It increased by 53% in one year, whereas CQQQ, that is, Chinese technology companies, decreased by 34.19% in one year. It's really weird how much of a gap there is. I don't know if it will continue like this. As of yesterday morning, I see that the Chinese stock markets are not looking very sweet again. I predict that the Chinese government will intervene here.
If the Chinese economy worsens, two risks increase. Firstly, as everywhere, governments try to cover up the bad economy with war and national heroism. God forbid, I am afraid of him. Secondly, after all, American companies also sell goods to China. Tesla is one of the most important examples of this. This week Apple's phones in the Chinese market
We see that serious discounts have started to be applied. So I think things are getting a little dangerous around here.
Therefore, it would be good if China recovers a little, and two fundamental changes are required for its recovery. One of them is that western markets will be better so that China's export figures will recover slightly. There has been such a slight upward break in the last month. That's good news: Secondly, the Chinese government needs to open up its purses a little. It needs to loosen the regulations a bit. It needs to give up this centralized rigid structure and become more investor and entrepreneur friendly.
There is a lot that can be done in these areas. So we cannot wipe out China in one fell swoop. But the situation is not positive at all and I can say that I am very disappointed here. The third thing that surprises me is the trend in semiconductors. Frankly, I thought these would go a little slower this year. So I was seeing the direction up. But I didn't expect this type of attack.
Nvidia's last year's increase reached 233%. AMD's increase reached 148%. SMH, the largest ETF holding these semiconductors, also has an increase of 64.66% and they have continued to increase since the beginning of the year. So, frankly, I was expecting a bit of a slowdown here. We are currently in a bit of a difficult place technically. Fundamentally, we are in a bit of a difficult place. It is very difficult to predict whether it will continue. For example, when we look at this SMH ETF, we see that most of the stocks here are above the 200-week moving averages. It's a bit of a dangerous thing to have most of them there.
Also, when we look at the RSI, many of them are above 70. Nvidia and AMD are also included in this. I'm not saying these won't go up from here. I still think that nvidia and amd have a long way to go in the long term. But there is a little problem in both fundamental analysis and technical analysis. If you want to go into details. Let's look at SMH first, the ETF of semiconductors is currently based on RSI of 75. As you know, over 70 is the danger zone. Can he stay on this for a while longer? Because when we look at past examples, it can last a long time here. But eventually these high RSIs break down. When we look at MACD, the upward break continues. Of course, that is still a positive indicator.
But no matter how we look at it, it seems like we've gone a little too high in smh. Can it go any further? But I am not sure whether to enter this stock from here. Maybe if you are doing a long term dollar cost averaging, of course, but in the short term you would have to be blind not to see the risk here. The situation is no different in nvidia, one of the largest stocks that make up the SMH ETF. We've been going over 70 for a while now. Currently, our RSI number here is at 80, the MACD is also broken and there are still strong upward candles. But this is no longer a cheap stock either.
So, if the maturity is long, I don't see any harm in dollar averaging, but from here, you are taking the risk in sudden large entries. It can go up can keep going here for a long time. Even if it retreats for a while, it may come back and rise again. But now that means the stock is cheap. It's a bit difficult, the price earnings ratio is around 78. But it's actually a very expensive stock. In my opinion, AMD's price earnings ratio has reached 1374, its RSI number is around 80, and its MACD seems to have skyrocketed. So I think we're somewhere near the top here.
But obviously there is a lot of demand for semiconductors. Because the Artificial Intelligence side is growing so fast that I wouldn't be surprised if AMD may still have a long way to go. But we should not ignore the possibility of retreating from here. That's why I'm a little hesitant about semiconductors. My prediction was that these rapid increases could stop. For this reason, we are always open to error, but these stocks are definitely not cheap shares anymore. It is very difficult to find opportunities here that we had in March, April and May last year. If there is a withdrawal, they may be withdrawn harshly.
When do they withdraw? The balance sheet period is dangerous. The TSMC balance sheet that arrived last week was very positive. Tsmc announced that it will make a lot of investments for the future. What is the importance of Tsmc? Tsmc is the company that produces the chips of these companies. As you know, these are designer companies. The fact that he invested a lot was also put forward as an indication that things would go well. That's why good balance sheets can take us even higher. There are a few very important balance sheets this week. It's about semiconductors, but I mean, are we running out of places a little bit?
At least I think so in the short term. It would be beneficial to tighten it a little bit, perhaps with stop loss. Because I think the return of fast candles may be a bit unpleasant.
Speaking of balance sheets, really important balance sheets are coming this week. First of all, Netflix is coming this week. Netflix always has a lot of influence on the stock markets. Because if Netflix brings a bad balance sheet and falls, that balance sheet period is usually bad. I don't know why Wall Street attaches great importance to Netflix, or because it is the first major technology stock to announce its balance sheet, it determines the future to a certain extent. I'm a little scared from there. There are generally difficulties in Netflix's turnover growth. In terms of per share stability, it generally meets the targets. Let's see what happens. Netflix important balance sheet. Although Texas Instruments is not as important as Netflix, it is a balance sheet that will show what is happening especially in semiconductors, but more important balance sheets are coming on Wednesday. First of all, Tesla is coming.
When we look at Tesla technically, it looks like we hit the bottom on Friday. I foresee that we can push such a level of 230 again until the balance sheet period, just due to the technical stance. Apart from this, there are two more positive news. Yesterday, we learned that the twelfth version of the autonomous driving FSD software has started to be downloaded to large consumer vehicles. This is very important because we know that version 12 is no longer beta. Now Tesla says that I am quite ready for autonomous driving. Also, version 12 is very different from version 11.
There is no more code written by people here. The car learns on its own, they develop the code on their own, on computers in the big dojo at the center. Algorithms have important effects in this respect as well. I see the impressions of the first users, they are very satisfied. But of course I haven't experienced it closely. That's why Tesla is so important. ASML is a company in the Netherlands and ASML is a company that sells companies that produce semiconductors, namely TSMC machines. We are very curious about his balance sheet. Lam Research, like ASML, is one of the main suppliers of large semiconductor companies. What comes from it will be decisive in the balance sheet. So, if we get through this Wednesday without any accidents, I think we will go to Nasdaq's all-time high. Because ASML and Lam Research will excite semiconductors.
Tesla is already one of the important stocks of Nasdaq 100. If Netflix hasn't let us down, an All Time High may come next. But if Netflix returns a bad balance sheet and experiences a decline, it would be useful to look at the rest of the week and perhaps the period between February and March with at least a little concern. Two important balance sheets are coming on Thursday. Intel is the first, the other is Visa. Visa is an ISP that I like very much.
Visa also shows a lot of direction in terms of where the world economy is heading. Visa's balance sheet will also affect PayPal, and remember, on January 25, PayPal CEO said he will make very important statements. "We are making such innovations on the technological side that the world will be shocked," he said. There was a lot of gossip about this over the weekend. I wonder if they are collaborating with Twitter? Because, as you know, Elon Musk is also trying to turn Twitter into a payment platform and Elon Musk is one of the founders of PayPal.
I mean, I wouldn't be surprised if there was such a collaboration, but these are just rumors right now. Now, if Visa brings a good balance sheet as a payment system that day, Visa's gross decisions are excellent, by the way, around 90%. Paypal's gross profit is not good, but the fact that Visa is growing means opportunity for Paypal. And if they announce good things on the innovation side that day, PayPal will also go up. Frankly, I always look at days like this with a bit of anxiety. When expectations are set too high, what happens can upset us. We experienced this recently with Bitcoin etf.
There is also an important balance sheet on Friday. American Express is just like Visa, that's all, it's just as important as Visa, although I don't care about it, it is useful to follow American Express. So, it is a critical week in terms of balance sheet. I will follow Netflix, Tesla, ASML and Lam Research closely. There is quite a bit of data flow this week. American manufacturing PMI data will be released on Wednesday. Let's see if the economy is growing or shrinking. Core durable goods orders will arrive on Thursday. Fourth quarter gross domestic product data for 2023 is due next Thursday. We expect growth, of course we do not expect a shrinkage here. Because the performance leading up to that point is obvious. New housing sales will come.
But I think the real critical data will be PCE inflation data before the market opens on Friday. After all, don't forget that everything in America depends on inflation and the FED is meeting next week and it would be great if the PCE dropped below 3% before the FED meeting. I expect around 2.9 - 2.8. I haven't analyzed it in detail yet. PCE inflation data will come on Friday, but it is very critically important. If this drops to 2.9 - 2.8 levels, morale will really improve and as of this week, 20% of S&P 500 companies are reporting their earnings.
If you ask what the expectations about the FED are, by the way, there are decreases due to the expectations that the FED will reduce interest rates. Will the FED reduce interest rates in March? It is thought that there is an 85% probability that it will reduce it, but we were actually higher. It is thought that the probability of downloading it on May 1 is still high. Will the interest rate decrease at the FED meeting on January 31, next week? The probability seems to be around 2%. Frankly, I don't expect it either. Me, but I'm more or less 100% sure about March. Something may even come before that. Because I mentioned before, January and February inflation will be shockingly low. That's my opinion. At least, I think we will see below 3% for the first time in the next PCE this week. This may help the FED soften its rhetoric at next week's meeting, even if interest rates are not cut. Of course, on the contrary, things will get messy. Yes, things are like that. We are truly in an exciting week.
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