Scenario 3 – Muddling Through 2024, Range r Us

The last 2 weeks we recapped the first quarter 2024 returns, and covered what the remainder of 2024 and 1q2025 might look like for stock markets under 2 scenarios, first a continued soft-landing outcome like 1995 which would project 5900-6000 in the first quarter of 2025, and second, a hard landing outcome like late 2000 early 2001 post the bubble when the fed and economic slowdown induced a recession and the markets dropped -30% equating to 3500-3600 on the cash S&P 500.  Which happens to be where the market was in late October 2022 ate the most recent major low.  Here are the links to those two prior videos, I’m biased, but I think they are worth anyone’s 6-10 minutes if an investor is interested in economic and stock market cycles.

Before we get onto scenario 3, which I title “muddling through with a shot of volatility”, I want to briefly note that this past weekends Iranian missile attack retaliating back at Israel, does play into the hand of an earlier Federal reserve interest rate cut this year which would most likely be taken by investors for a while as good for the markets. However, this rapid escalation of fighting in more regions of the middle east also ups the risk of the potential hard-landing outcome that played out in the 3rd quarter of 2000 through 2001. That was last week’s video.

While this outcome would be very rare for a 4th year presidential cycle, as politicians are busy trying to win votes and the election by keeping the economy chugging along, it happened in 2000 and 2008 as well.

As we stated in last week’s video, the prior low index level volatility regime we were in during the 4th quarter 2023 and 1st quarter 2024, up until the attacks in Iran and Israel the last 10 days, most likely wouldn’t last.  Well sure enough the low vol environment didn’t with spot volatility rising quickly last Friday to 19.25, up from about 12.5 2 weeks earlier.

What would muddling though look like for the rest of the year?  It would probably look a lot like a combination of 2000 without the terrifying ending and 1995 without the party at the end of the year.

Given what our team sees in earnings growth, interest rates, volatility markets, sentiment levels, and economic and Presidential cycles it would probably look like a big range between say 4900 on the S&P 500 and 5350-5400.

The first level down of around 4900 cash S&P 500 is the level that forward volatility markets, or those insurance salesmen who price forward risk, says that big institutional buyers might look to back up the truck and reenter the markets in size. In addition to volatility markets looking at that level, normal Presidential cycle and seasonal trading patterns also triangulate in many cases to that level.  4900 is where we closed out January and many years that start off strong return to their January closing level at some time during the first half.  Here’s an updated chart of the overplay of the S&P500 from the, 2h1998-2001 time period, compared to the 2h2022 through current.

updated chart of the overplay of the S&P500

As one can see, the S&P 500 fell sharply and quickly in the 2nd quarter of 2000, retracing much of the first 3 months’ gains in the first 3 weeks of April.  However, the markets found a bottom and did rally back toward their highs into midsummer 2000 before succumbing to a slower economy and the Fed.  Should we muddle through like this, that would equate to 4900 down, and say 5300 up before the election.  Here is a chart of the cash S&P 500 pre-Monday, April 15th opening.

chart of the cash S&P 500 pre-Monday, April 15th opening

Since this is a cash S&P500 chart, is does not incorporate overnight futures prices. These overnight and premarket moves can be hundreds of points or large % moves that are never seen by the cash indexes the next day when markets reopen for trading.  Jim Cramer calls then pajama traders.  I call it trading without guardrails.  Recall the crazy overnight moves the futures made the night of the Presidential election in 2016 as DJT went from losing to Hillary Clinton to projected to win along with a flipping to a GOP led Congress?

A muddling through might have us pull back to 4900 now then rally back toward 5300 into earnings reports for the 2nd quarter in July, Most Presidential election cycles have weaker 3rd quarter returns due to pre-election jitters and normal summer seasonal economic slowdowns. This might play out with the S&P 500 retracing a lot of the possible 2q gain into late October.

After the election, a subsequent “normal” post Presidential Santa Claus rally into mid 1q25 could ensue taking the markets back toward 5400ish.  So all and all, the year of 2024 would look “good” overall but post our 1q24 gains, the rest of 2024 and 1q25 would look like a lot of noise up close with higher volatility, and a whole lot of nothing big net, if one zoomed out on a monthly basis.

Investors, that’s it for this week and our teams’ thoughts on 3 scenarios for the rest of 2024 and early 2025.  If you are interested in discussing which of these outcomes, our investment team feels most strongly about, give us a call, set up a meeting with an OHFG advisor and become a client, our OHFG investment team is a company resource and is here to help our advisor team best serve you our clients.

Right now, our team doesn’t see the leading signs of a future recession this year but can say, that we will have one again in this decade, and recession in the stock market are a minimum of -30% down moves. Right now. That would equate to back down to 3600 -3700 on the S&P 500, back where we were in October of 2022 when we did experience an earnings recession in the market.

For investors or retirees uncomfortable with wider range of possible equity outcomes, the Oak Harvest team has launched a new strategy that retains the ability to go long stocks, short stocks, as well as buy partial hedges and shock absorber “insurance” for a stock portfolio.  Information on this exciting new strategy of ours can be found at  From the whole team here, thank you and have a great weekend.

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