Weekly Market Recap: Key Insights, Strategies and 2025 Opportunity Prep

Hello everyone and happy weekend!

It’s great to join you all at Diamond Ridge Financial Academy to share and learn about investing. I hope my insights will be helpful to you and I wish you all a pleasant evening.

This week, due to the Christmas holidays, the market has been relatively quiet. However, this calm gives us the chance to step back, analyse and reflect. By studying the use of the 21-day moving average and support levels, we identified precise trading opportunities in volatile assets like Trump Media & Technology Group (DJT) and BTC. More importantly, we deepened our understanding of technical indicators, helping us better gauge market sentiment and make informed decisions about entry and exit points. These tools have allowed us to stay calm and efficient in a complex market environment.

Additionally, this week’s lessons reminded us that short-term fluctuations often reflect deeper market dynamics. Whether it’s a stock’s technical adjustment or crypto price swings, factors like fund flow and market confidence play a crucial role. Through practice, we not only gained trading success but also learned the value of a steady strategy and patient waiting.

Tonight, let’s wrap up the market situation for this week and get fully prepared for next week’s trading. First, let’s look at the UK stock market. Due to the Christmas holidays, the UK stock market was open for just two and a half days this week. The FTSE 100 index found support at 8000 points and rebounded by 0.81% this week.

From a fundamental analysis, here are the reasons for the UK stock market’s rebound this week:

1. Economic data showed positive signs of recovery, which had a positive impact on the UK stock market. The global economic recovery boosted investor confidence in economic growth, driving the stock market up. Specifically, the improvement in US economic data as the world’s largest economy, directly had a positive effect on the UK stock market.

2. With the year coming to a close, the market generally expects policy adjustments, especially in fiscal and monetary policy. This week, the Bank of England’s interest rate decisions and policy outlook showed positive changes, boosting market sentiment.

3. The performance differences between industries during this time also contributed to the UK stock market’s rise. Certain sectors, like tech and telecom services performed well due to specific market dynamics or technological advances. The strong performance of these industries, especially leading companies in these fields, helped drive the overall market up.

Technical analysis shows that the UK stock market should see a rebound this week. Last week, the FTSE 100 index just touched our predicted support level near 8000 points, then bounced back. This 8000 point level coincides with resistance levels from Feb 2023 and Apr 2024, as well as support levels from Aug and Nov 2024. As shown in the weekly chart above, these four points are aligned on the same level, forming a strong short-term support which has triggered this week’s rebound.

At the same time, the sharp drop last week relieved some bearish pressure, attracting some buying after many stocks experienced a sharp decline in a short time. Additionally, some key indicators have shown buy signals, such as the MACD dropping near the zero line, further supporting the expectation of a rebound.

As the market enters a balanced phase between bulls and bears and with no specific policy impacts, the FTSE 100 index is expected to move into a range-bound pattern, with the expected range-bound movement for next week being between 8100-8190 points.

Similarly, after the sharp drop last week, the US stock market saw different levels of rebound across its three major indexes. For the week, the Dow Jones rose 0.35%, the S&P 500 gained 0.67% and the Nasdaq rose 0.86%. However, in practice, the indexes performed much better than individual stocks, leading to a situation where the index rose but individual stocks didn’t. The main reasons are as follows:

1. Policy expectations drive investor preference for index assets.

The uncertainty over policy direction has increased defensive sentiment among investors. The US Treasury Secretary warned that the debt ceiling could be reached by mid-Jan, pushing funds toward large-cap index stocks rather than riskier individual stocks. Additionally, trade policy threats from Trump, such as potential tariffs on the EU have added to market uncertainty. This has led investors to favor index components with higher safety margins, driving the rebound in the major indexes while mid and small-cap stocks and non-core industry stocks have performed poorly.

2. Quantitative funds amplify market volatility.  

Quantitative funds, through high-frequency and algorithmic trading have a deep impact on the market. Especially during holidays when market liquidity is lower, the influence of quantitative funds on stock price movements has been more pronounced. This has led to sharp fluctuations in individual stocks which generally declined while large-cap indexes, supported by stable large-cap stocks showed more resilience, creating a divergence between the index and individual stocks.

3. Economic data eases inflation concerns boosting index performance.  

This week’s US economic data was overall positive, particularly the Nov core PCE price index which showed a lower than expected monthly increase, indicating some easing of inflation pressures. This had a positive effect on market sentiment, particularly supporting the valuations of index component stocks. However, for companies that failed to meet earnings expectations, investors showed higher sensitivity which led to pressure on individual stocks.

Overall, the market rebound this week reflects the concentration of funds into safe assets. Meanwhile, there’s a clear divergence in individual stocks highlighting investors' sensitivity to companies' fundamentals and policy outlooks. The core driver of short-term market volatility is the adjustment of policy expectations for the new year. As 2025 approaches, major global economies will start rolling out new policies which could bring uncertainty risks but also provide opportunities for investors to capture potential gains.

A particularly important point is the upcoming shift in US economic policy with Trump’s return to office. As the world’s largest economy, the US policy direction will have a far-reaching impact on international markets. From trade policy to industry support, any major adjustments could reshape global capital flows.

Additionally, geopolitical tensions have become potential market variables. Whether it's energy supply chain stability or progress in multinational cooperation, these factors will have varying degrees of impact and push on capital markets.

Given this complex background, investors need to pay more attention to structural opportunities arising from policy changes. For example, looking for potential opportunities in infrastructure and energy policies that might be driven by the Trump administration. Particularly, Trump's support for digital economy, AI and other tech sectors will significantly drive the growth of the tech industry in 2025.

At the same time, investors should stay alert to potential risks, such as the limitations of traditional industries' long-term growth. With the major shifts in the global economy and technology landscape, the potential risks will increase. Therefore, a solid strategy and flexibility will be key to navigating future market fluctuations.

Of course, all market analysis ultimately needs to be applied to actual trading practices. This week due to overall market volatility, many investment options showed instability, leading to a decline in individual stock returns. Some students even faced floating losses because they didn’t follow the recommended price levels. The weakening of profit effects is mainly due to the adjustments expected in the monetary policies of major economies like the US and the UK for 2025, along with the uncertainty of policy changes at the start of the year which caused market fluctuations beyond expectations.

Investment never guarantees a 100% success rate but by studying economic policies and technological development trends, we can identify the big picture. For example, the ongoing tech revolution, especially the rapid growth in AI and clean energy offers long-term opportunities for investors. Based on this, combining technical analysis with support and resistance levels and price patterns can greatly improve the chances of success.

Also, investing requires not only professional analysis but also patience. Not all stocks will immediately yield returns after being bought. Many quality stocks may need some adjustment time as market consensus builds. During this period, staying calm in response to market fluctuations and making timely adjustments based on price trends and technical signals is crucial.

We’ll use the stocks we’ve been trading this week as examples. For instance, Trump Media & Technology Group (DJT) has become one of our main targets recently due to its unique tech development advantage, as well as the positive impact of policies under President Trump. Even though this stock is consistently bullish, we also engage in short-term trades based on price fluctuations.

For DJT, we bought around $30 (as shown in Chart 1) and it then continued to rise, reaching a resistance level near $39. Some of our students followed the sell-off or profit-taking moves at that time, achieving a 25%+ return.

In our latest trade, we bought near $33 (as shown in Chart 2). After four consecutive days of gains, it adjusted on Friday with the broader decline in US stocks. If we refer to the post-4-day rally in Chart 1, we expect a small adjustment next week before it starts to rise again.

So while trading individual stocks may seem complicated, as long as we follow the price fluctuation patterns, we can achieve stable profits.

Additionally, Coinbase is also worth a long-term bullish outlook. Although it didn’t see the big rebound we expected this week, the stock found support near $265. The uncertainty in US policies has led to negative effects on both tech stocks and the crypto market, causing panic selling in related stocks. For those who added positions, don’t worry, just hold on and we will continue to track this stock.

Strategy-wise, if BTC drops below $92K in the short term, Coinbase may face one final round of selling. After this bear market exhausts itself, we expect a strong rebound. But no matter what happens in the short term, tokenization of digital assets is an inevitable trend in the future tech revolution. So, from a long-term investment perspective, Coinbase as a representative of global digital asset exchanges has strong potential for long-term growth.

From a technical perspective, students who have been diligently studying technical analysis methods might have already noticed that the 21-day moving average is a very practical and easy to use tool, especially for beginners. Using BTC’s price action this week as an example, when BTC’s price is above the 21-day moving average (as marked at positions 1, 2 and 3 in the chart), the candlesticks steadily rise along the 21-day line, showing a strong uptrend. However, when the price falls below the 21-day moving average (as marked at positions 4 and 5), the likelihood of a market decline increases significantly.

Additionally, by looking at the chart, we can see that price reversal or upward points often coincide with previous support or resistance levels. This indicates that the price movement pattern is actually quite clear by catching these key patterns, investors can greatly improve their chances of success. So, for beginners, mastering the basic use of the 21-day moving average and support/resistance levels will allow them to quickly get started and profit in practice.

At the same time, this is one of the main reasons we introduced our quantitative trading system. With the help of AI algorithms, we can more accurately capture market patterns and signals, avoiding the interference caused by human emotions, which can significantly improve investment returns. This combination of technical analysis and technology provides investors with more efficient and reliable strategy support, helping them find stable profit paths in a complex and changing market.

That’s all for tonight’s share. I hope this content helps everyone better understand the current investment market dynamics and opportunities. The future belongs to those who can catch the pulse of the tech revolution and accurately perceive market patterns. We look forward to partnering with more investors to kick off the new era of smart investing and achieve long-term wealth growth.

Next week, we’ll celebrate the happy New Year. As a thank you for your support, our Business Academy has prepared a special New Year’s investment gift pack. If you haven’t received it yet, please contact the assistant to claim it. Wishing everyone a happy New Year in advance!

For tonight’s share, think about these questions:

1. How will the stock market perform next week?

2. Where are the investment opportunities for next year?