What lies ahead in 2025? Will it be much like 2024, only more so?

Dear Trading diary: At this time of the year it is customary to assess the year’s trading performance. Yes, I managed to latch on to some superb lengthy swing moves especially in Crude and Gold. I managed to catch the highly unexpected Gold breakout at the $2,000 level in February and ride the bull to my latest exit at $2,680 this month with many swing trades along the way.

As a swing trader my main objective is to anticipate good-sized swings (high to low and vice versa) when markets appear over-stretched – or on the verge of a breakout. And if I was too early in a swing (a common theme for me), I would take my small loss (3% Rule) and look for a better entry.

I am bullish when markets rise and bearish when they fall. I am not married to a particular point of view until markets go my way. I am more like a person of easy virtue than a dogmatic believer.

My prime goal is to trade only when odds appear on my side and to stay with the trade so long as it remains in profit. I am guided by where I believe market sentiment sits. If bullish sentiment is off the scale, I look for tops and vice versa. If I am wrong, I take my small (less than 3%) loss and re-assess.

Rinse and repeat and I look forward to doing the same in 2025.

It took me a while to appreciate the value of using trailing stops but last year, that tactic came very much to the fore. I never stop learning! A very recent example was my latest long Nasdaq campaign. Although I have been generally bearish expecting major tops all year, I have become bullish when the situation demanded. And it did on 20 November when signs were good the market was in a dip where a move to a new high appeared highly likely. I went long.

When it hit a major target I took half profit (Split Bet Strategy) of 430 points. My remaining half position then advanced strongly and I kept raising my trailing stop until it was hit on the sharp decline of 18 December off its still standing ATH. My profit was a cool 970 points for that half making a total profit of 1,400 points.

Remember, I was bullish and bearish at the same time and still made money despite my split personality! How about that? Sometimes, the markets are mysteriously wonderful, aren’t they?

I have found that many traders over-complicate their analysis and cannot see the wood for the trees. I try to avoid that – in fact, I simplify wherever I can. Most times, the market is driven by a simple narrative. For example, tech stocks are being driven by expectations of massive profits to come from AI. Upstream chip-maker Nvidia is living proof with its regular blockbuster earnings reports (downstream is different). Trends are up. What else do we need to know?

Ah! I hear you cry! Yes, trends do end at some point. And the end arrives when few expect it. That is one of my tasks in life – to anticipate the likely turning points.

And on Friday – when most did not expect it – US shares tanked and put a big question mark over the presumed Santa Rally. And on no new news. Puzzling? No – this was the Nasdaq chart I posted to VIP Traders Club members on Friday morning:

The ATH was put in on 17 December and since then the market has traced out a textbook five down/three up. That is one of the clearest indicators for a major trend change. Then, in the afternoon shares started swooning and followed my wave 3 arrow down roadmap. I had anticipated Friday’s swoon.

Another clue yesterday was the kiss on a major trendline and Scalded Cat Bounce down in the Dow that I had flagged. I will cover that on Monday for VIP Traders Club members.

But as I gaze into next year’s crystal ball, what do I see? Do I see calm and orderly politics and markets? Do I see even more leadership from AI with breadth ever more narrowing? Will investors continue rolling out of the laggards and move more funds into big tech such as M7? Will Trump really impose huge tariff walls? Will he really cut taxes to boost the US economy? Will Canada really become the 51st state? Will Musk continue to be the power behind the throne? Will the UK really re-join the EU and boost the economy? Will Trump/Musk really defeat The Blob and drain the swamp? Will pigs really fly?

Trump will have his feet under the Oval Office desk on 20 January – a date when I expect huge market volatility. Do I want to have large positions on in that event? That is a question for all of us, I believe.

Whither UK house prices? The relentless rise in UK’s nominal average house prices is so firmly established in all our minds that many cannot conceive of a decent fall next year. But I can. Below is a chart of that measure adjusted for inflation.

The dotcom share boom of the 1990s where animal spirits ran at a feverish pitch was equally matched in the housing market with a surge to the £300k level.

As that boom cooled, house price growth reversed but then in 2012 it began another boom following the massive injection of liquidity from central banks’ QE operations. Prices rose again and moved up to match the previous peak at £300k. But that was it – with affordability at record low levels and mortgage rates still high (and getting higher), inflation-adjusted prices fell and are still falling.

From a simple chart perspective, prices have just dipped below the critical previous low and stand at £220k (as of April).

If, as seems likely, we have a Double Top at £300k the trend is now down with a first target at £220k.

The consensus is that inflation will stay low and get even lower. That means if prices do not recover, any ‘unexpected’ increase in inflation would likely send the chart lower.

UK HOUSE PRICES 1990 – 2024 ADJUSTED FOR INFLATION

Of course, we get the very reasonable MSM rationalisations for a continuation of house price growth from continued massive immigration to lack of supply to wage growth. Also, building materials are extremely costly as are land values for new building. Input costs are high and put a floor under new build pricing..

But house prices are set by sales of existing homes, not new builds. We know the government is dead set on building 1.5 million new homes (good luck with that) and will try to sweep away existing planning restrictions to achieve it. But it is the large builders that will be tasked with the job.

So are the shares of UK’s builders anticipating the massive profits to come from this scheme? Not really – Persimmon is trading at £11.85 – a new low for the year and 30% off its yearly high. So is the market pricing in massive losses instead for taking part in this house-building scheme? Hmm.

In my day, it was the local councils that built the social housing and hence cut out the middle man (today’s big builders). Rents were reasonable. Not any more.

Next year, on the basis that the new normal is to expect the very unexpected, will we see a drop in legal and illegal immigrants, or a surge in mortgage rates to kill demand esp for first time buyers, or a return to ‘pre-fabs’ to satisfy demand at the lower end, or something totally out of left field?

And there are plenty of left field candidates – from the higher stamp duties coming in April to higher unemployment figures to higher mortgage rates (another bond bust emanating from the US CRE Damocles sword?) to a tsunami of landlord sales chased out of the buy-to-let sector by the successive government raids.

Sentiment remains bullish by the ‘experts’ who expect higher prices (higher in the North than in the South). We shall see. I admit it has usually been an exercise in frustration calling tops in the UK housing market over the years. And that is why I will not – but the headwinds next year do appear far stronger than usual.

Another macro factor is the declining global M2 money supply that is dropping quite sharply. Demand for the diminishing money supply means only one thing – higher interest rates. Unless central banks re-introduce QE and lick all the cans down the road again. I see that as unlikely – unless stocks really tank in Q1/25, that is.

Is the rampant dollar on the turn? Club members and regular readers will know that I have been on the hunt for such a major reversal given the 90% DSI bullish stance of the market and the chart patterns (see last week’s post). Most of us trade EUR/USD as a proxy for the dollar. The election of The Donald in November was the catalyst for the latest surge in the dollar’s price and sentiment. Hopes have been riding high that Trump would Make the Dollar Great(er) Again. But will those hopes be dashed?

Most of us trade EUR/USD as a proxy for the dollar – here is the latest picture on the daily:

The euro made a major high on December 27 last year and yesterday Friday was its anniversary. How poetic it would be if yesterday marked the kick off to another major swing – this time up. I have a large mom div on the daily and sentiment is right behind me (only 10% bulls). The ride up should be spectacular.

I am on the verge of kicking off my dollar campaign. Take a Free Trial to my VIP Traders Club here. Or for smaller accounts, take a Free Trial to my Phoenix Traders Club here.

So how’s that Net Zero investment thing working out for ya? My year would not be complete without a mention of the Net Zero fiasco that promises to implode next year. We have been promised cheap electricity courtesy of the widespread adoption of the ‘renewables’ solar panels and wind turbines that increasingly cover our land. As I write, my own bills remain elevated and industrial users are paying the highest rates in the world at four times those in the US that has its own energy supply.

So no progress then, all the while CO2 concentrations are still climbing (and greening the earth) as coal use is still making record highs around the globe. As a measure of how disastrous investments in the shares of Net Zero companies has been, I note that the huge Danish turbine blade manufacturer Oersted made its ATH at 1,350 DKK in 2021 and is now testing new lows at 330. Top Chinese solar panel supplier Trina Solar is down to 20 yuan from 83 in 2022. I could go on.

Share investments in Net Zero have been an utter disaster and about the only ones to make serious money from Net Zero are the wind/solar farm operators who coin it in even when the wind fails to blow and the sun to shine with so-called ‘constraint’ payments. They get paid for producing electricity and also for not producing electricity! Nice work if you can get it – courtesy of their political friends who set up this arch-rentier scheme, of course, to the detriment of consumers.

For Pro Shares members I have studiously avoided Net Zero investments. And on the sharp 18 December break in the US tech sector, I took part profits in all of my tech issues including Alphabet – a prime AI leader.

My forecasts for 2025? Much like 2024, only more so. Yes, I expect more of the extremes and the unexpecteds. Staying nimble will be a key ability not only to avoid losses but to flourish in the train wrecks that I expect.

Wishing you all a very prosperous and exciting 2025!