ChartWatchersStockCharts.comExpert market commentary from StockCharts.comtag:stockcharts.com,2019-04-18:blog-22024-03-08T20:36:35ZOzempic Set the Stage, But Could Novo's Newest Drug Be the Real Moneymaker?Karl Montevirgentag:stockcharts.com,2024-03-08:post-273172024-03-08T20:36:34Z2024-03-08T20:36:34Z<p>If you ran a StockCharts scan for <a href="https://school.stockcharts.com/doku.php?id=chart_analysis:gaps_and_gap_analysis" target="_blank">Runaway Gaps</a><span target="_blank"> (Runaway Gap Ups) on Thursday, you would have come across only 12 stocks. Among them, the most recognizable name was Novo Nordisk A S (NVO), the Danish pharma company best known as the developer of the popular diabetes II drug, Ozempic.</span></p><p>Having already gained 26% since January, NVO jumped over 9% after reporting successful early trial results for its new weight loss drug, amycretin. Trial participants who took the drug achieved an average weight loss reduction of 13.1% over a 12-week period.</p><p>Wall Street sentiment is betting on the possibility that this new drug will be just as big as, if not bigger than, Ozempic, and some investors want to get in early. It's easy to see why by simply looking at a weekly chart plotted over five years, covering the time when Ozempic became mainstreamed not only as a diabetes drug, but as a weight loss drug.</p><p><img src="https://lh7-us.googleusercontent.com/DAzy_vzajhB8n_mRi2eBxetYK1QCWzx8Y7gocCyEMBag9O6lcYzV6_-TRZ_PNT2j66gcY8qbPb44uqAe_DrswUHPJjIRqSnwmqEB9pAd95_xMKq87NnJ9dHT0hN41SW4ChQLnhLEXxAAeS8h2Svui-w" style="display: block; margin: 0px auto;"><span class="image-caption">CHART 1: WEEKLY CHART OF NOVO. Notice the significant strength and momentum of the uptrend over a five-year period. The demand for weight loss is virtually "inelastic" these days.</span></p><p>Looking at the 50-, 100-, and 200-week <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages" target="_blank">Simple Moving Averages</a><span target="_blank">, not only are have they been fanning-out in full sail since Ozempic ads have began penetrating the mainstream consciousness, but NVO appears to be stretching the MAs to breaking point (if you can imagine such a thing), defying gravity with only the slightest indication (yet) of a potential pullback.</span></p><p>The daily picture gives us a clearer picture, not only of the strength of NOV's performance, but of potential entry points should you want to go long.</p><p><img src="https://lh7-us.googleusercontent.com/pyvHnS9RPeG4kxBwNp2KtLDS7NfFj8bgEtYma1E4JVKnAN2Y1cDP7mia0m4ByC2YTcRQrMI2vkNjDfv0M8D2pTRZvE53TxovAPgwi6uiffrj_f2wNndHIMWBEvUcd9l1_j59-_J7Tg9us7K1OeDXCVI" style="display: block; margin: 0px auto;"><span class="image-caption">CHART 2. DAILY CHART OF NVO. Not only does this look like a microcosm of the longer-term weekly chart, it also illustrates a similar trend relative to the broader market, its sector, and industry.</span></p><p>Runaway gaps, characterized as strong bullish continuation patterns, are located in the middle of a trend. But trends can only be confirmed looking backwards; we're not there yet. So, are we looking at an exhaustion gap instead, one on the verge of a pullback?</p><p>Note the divergence between NOV's price surge and the <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:money_flow_index_mfi" target="_blank">Money Flow Index (MFI) </a><span target="_blank">reading. As a volume-weighted RSI of sorts and an indicator to gauge momentum and anticipate possible reversals, the divergence we're seeing hints at a potential dip in NVO's share price.</span></p><p>Despite this, note NVO's strong outperformance relative to the S&P 500 (+17%), its own sector via SPDR Health Care Select Sector Fund XLV (+20%), and the Dow Jones U.S. Pharmaceuticals Index or $DJUSPR (+23%).</p><p>The 50-day SMA and the <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:ichimoku_cloud" target="_blank">Kumo segment of an Ichimoku Cloud</a><span target="_blank"> has been plotted to show a potential landing point if a pullback were to occur. And if NVO were to pull back now, drawing a Fibonacci retracement from the October 2023 low would give us a 50% level right at $112.50, so we're looking at the range, mostly covered within the "cloud."</span></p><h2>The Bottom Line</h2><p>But here's where you really have to think for yourself. Ozempic fever drove NVO's seven-year uptrend, and arguably, it isn't over yet. The most recent surge is driven by sentiment and speculation surrounding that amycretin will bolster and continue NVO's winning streak. The $112 to $118 range may be a reasonable "technical" entry point, but with a PEG (Price to Earnings to Growth) ratio of 4.87, it's far from being undervalued.</p><h2>How to Run a StockCharts Scan</h2><p>Finding the right stocks and exchange-traded funds (ETFs) to trade can be tricky. But with a little work, you can create a strategy that identifies a few promising prospects.</p><p>Fortunately, it isn't too hard to learn how. Just stick to these steps:</p><ul><li>Select (or create) a few different scan criteria</li><li>Be sure to run these scans regularly</li><li>Analyze the stocks (or ETFs) that your scan has identified</li><li>Determine your overall trading setup (including your entry and exit criteria)</li></ul><p>The <a href="https://support.stockcharts.com/doku.php?id=scans" target="_blank">StockCharts Scan Engine</a><span target="_blank"> is useful for narrowing down stocks and ETFs that match certain requirements. It comes with a bunch of ready-made scans that are a good starting point. As you get the hang of these scans, you can adjust them or create new ones that align with your trading goals.</span></p><p>For example, this article was prompted by a Runaway Gap Ups scan. As you can imagine, there are plenty more scans you can run. Try out the StockCharts Sample Scan Library (Charts & Tools > Sample Scan Library)</p>If you ran a StockCharts scan for Runaway Gaps (Runaway Gap Ups) on Thursday, you would have come across only 12 stocks. Among them, the most recognizable name was Novo Nordisk A S (NVO), the Danish pharma company best known as the developer of the popular diabetes II drug, Ozempic.Having already gained 26% since January, NVO jumped over 9% after reporting successful early trial results for its new weight loss drug, amycretin. Trial participants who took the drug achieved an average weight loss reduction of 13.1% over a 12-week period.Wall Street sentiment is betting on the possibility...Market In a "Wait and See" Mode: Awaiting Important Inflation DataJayanthi Gopalakrishnantag:stockcharts.com,2024-02-28:post-272732024-02-28T20:15:13Z2024-02-28T20:15:13Z<p><img src="https://d.stockcharts.com/img/articles/2024/02/28/7d7b354c-bdd3-49a7-9d47-7882eb7083dc.jpg" style="display: block; margin: 0px auto;"></p><p>This is a big week for economic data—durable goods, consumer confidence, GDP, and PCE.</p><p>Durable goods fell in January, which didn't impact the stock market. Neither did the revised GDP number, which came in slightly lower.</p><h2>Inflation In Focus</h2><p>Traders are anxiously awaiting the PCE data to find clues as to when the Fed will likely start cutting interest rates. Treasury yields are a little higher, probably because some of the more recent bond auctions on the 2- and 5-year Notes went well. The US dollar is moving lower.</p><p>It's almost as if the stock market has adopted a "wait and see" approach. You'll have to wait until Thursday morning when the PCE comes—will the stock market make a big move in either direction?</p><h2>Times Are Changing</h2><p>This week saw some changes in the Dow Jones Industrial Average ($INDU) and Dow Jones Transportation Average ($TRAN). Amazon (AMZN) has joined the Dow, replacing Walgreens Boots Alliance (WBA). It remains to be seen if this addition will help the DJIA's performance, bringing it closer to the performance of the S&P 500. What's interesting is that between announcement and inclusion, stocks that are going to be added to an index tend to rise. After that, the stock price often declines, and the stock that was kicked out tends to do better. AMZN's stock price closed lower today, and the Dow is down about 97 points. But one day doesn't make a trend, so there's no need to sell AMZN.</p><p>Uber Technologies' addition to $TRAN is an exciting change, since most companies that make up the $TRAN are shipping and freight companies. The addition of AMZN and UBER into the two Dow Jones indices reflects changing times.</p><p>It's interesting to see how $TRAN has performed compared to $INDU (see chart below). While $INDU was hitting new highs, $TRAN was lagging. This goes against one of the tenets of Dow Theory: if $INDU and $TRAN trend in the same direction, the entire stock market trends in a similar direction. $TRAN isn't hitting highs while $INDU continues to hit new highs.</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/28/1f72d162-7f23-4f05-a55f-08ad580178cb.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1. DOW JONES TRANSPORTATION AVERAGE ($TRAN) VS. DOW JONES INDUSTRIAL AVERAGE ($INDU). While $INDU has been hitting new highs this year, $TRAN hasn't been doing the same thing.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Meanwhile, in the equity space, chip stocks continue to carry the broader market higher. It's not just NVIDIA (NVDA); Micron Technology (MU) hit a new 52-week high on the news that it's starting high volume production of its High Bandwidth Memory E3 chips. These chips will be incorporated in the Nvidia H200 graphics processing units. Arm Holdings (ARM) has also been soaring this month after its alliance with some big AI players.</p><h2>Small-Caps Want To Join the Party</h2><p>While the semiconductors continue to rally, small-cap stocks don't want to get left behind. The weekly chart of the iShares Russell 2000 (IWM) shows it's trying to break above the resistance of a trading range (see weekly chart below). Will it succeed?</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/28/ef430c4d-a246-4a36-946f-7fa82c71e37e.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2. ISHARES RUSSELL 2000 ETF (IWM) CLOSE TO BREAKING OUT OF A RANGE. The big question is, will IWM break out, or will it retreat to its trading range? A lot rests on when the Fed will start cutting interest rates.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>It's still got a long way to go before hitting its November 2021 high. The first Fed rate cut may be when small caps take off, so monitor the S&P 600 Small Cap Index ($SML) on the StockCharts Market Overview panel (see below).</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/28/c49b5305-d053-4b3d-97b6-065fa377ebdb.jpg" style="display: block; margin: 0px auto;"></p><hr><p><img src="https://d.stockcharts.com/img/articles/2024/02/28/e60766e5-9536-414d-ae4a-52c75c1eb4bc.jpg" style="display: inline; margin: 0px 15px; float: left; width: 100px;"></p><p><strong>Cool StockCharts Tip. </strong></p><p>If you want a bird's eye view of the stock market, select the different tabs in the <strong>Market Overview</strong> panel—Equities, Bonds, Commodities, and Crypto—to see how the broader market is performing.</p><hr><h2>And Don't Forget Crypto</h2><p>One area that's been showing strength is cryptocurrencies. Bitcoin ($BTCUSD) is showing its bullish power this week. It's on tap to have three consecutive big up days (see chart below). This spike has helped stocks like Coinbase (COIN), Marathon Digital (MARA), and Riot Platforms (RIOT) move higher. COIN and MARA hit a new 52-week high today.</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/28/132b45da-f1c4-40fd-a26c-bd6877b266e1.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3. DAILY CHART OF BITCOIN TO US DOLLAR. Three big up days with above-average volume shows this cryptocurrency has momentum. It's not too far away from its all-time high of 69355.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><h2>The Bottom Line</h2><p>Equities are rallying, especially due to the AI buzz, so it's probably not the right time to be bearish on equities. The CBOE Volatility Index ($VIX) is still relatively low and shows no signs of investor fear. Thursday's PCE data will probably give the market a reason to move up or down. That's tomorrow morning (Thursday) at 8:30 AM ET. Pre-market trading should provide some clues.</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/28/b69e5801-437b-46e2-8d5a-7af1862c89ec.jpg" style="display: block; margin: 0px auto;" onclick="window.open('https://stockcharts.com/')"></p><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>This is a big week for economic data—durable goods, consumer confidence, GDP, and PCE.Durable goods fell in January, which didn't impact the stock market. Neither did the revised GDP number, which came in slightly lower.Inflation In FocusTraders are anxiously awaiting the PCE data to find clues as to when the Fed will likely start cutting interest rates. Treasury yields are a little higher, probably because some of the more recent bond auctions on the 2- and 5-year Notes went well. The US dollar is moving lower.It's almost as if the stock market has adopted a "wait and see" approach...Flip the Script: Defense as Your New Offensive PlaybookKarl Montevirgentag:stockcharts.com,2024-02-27:post-272702024-02-27T22:32:29Z2024-02-27T22:32:29Z<p><img src="https://d.stockcharts.com/img/articles/2024/02/27/ce0ddb10-73d9-4201-b418-8ec486cbcf49.jpg" style="display: block; margin: 0px auto;"></p><p>Historical and seasonal performance data indicate that the Utilities and Consumer Staples sectors can be effective growth instruments, particularly in March. Technical analysis of the current price action for Utilities Select Sector SPDR Fund (XLU) and Consumer Staples Select Sector SPDR Fund (XLP) supports the thesis that these sectors are poised for growth, offering traders potentially favorable entry points for capitalizing on this seasonal trend.</p><p>If the best defense is a strong offense, then sometimes the most effective offense is a defensive tactic used offensively (as Napoleon did when he used the divisional square tactic in the Battle of the Pyramids). It's a matter of proper placement and timing.</p><p>The same can be said when it comes to shifting growth vs. defensive tactics in your trades. Specifically, this article focuses on exploiting the Utilities and Consumer Staples sectors as growth instruments. It's a matter of timing.</p><h2>Exploiting Seasonal Growth Opportunities Using Defensive Sectors?</h2><p>This article takes its queue and slight diversion from <a href="https://stockcharts.com/articles/tradingplaces/2024/02/evaluating-risk-is-a-key-diffe-502.html" target="_blank">Tom Bowley's insightful article, </a><span target="_blank">where he discusses the risk-on and risk-off environment, comparing XLU and XLP with the "ultra-aggressive" Technology Select Sector SPDR Fund (XLK), a Tech sector proxy. Bowley makes a compelling and balanced case to consider risk and caution as the current bull market continues to reach new heights.</span></p><p>This piece takes a bit of a diversion. Here's the argument: From a seasonality perspective, March is<em> XLU's best month for growth and XLP's second-best month for growth</em>. In short, these two defensive plays happen to bring out their most aggressive characteristics (on a seasonal basis) in the month of March.</p><h2>XLU's 10-Year Seasonal Performance Against the S&P 500</h2><p><img src="https://lh7-us.googleusercontent.com/gA9r0-jgM5wgDOqIw48y5GMv9CyfxXJdiVwJWrMiu2ISMe1eiahkgsKtkqvW1u7zOSFw2R7GUYwcSJ8XfNnTMCCvQ-Lpdr8r51TXaDflhNr8LQ1ygkTLkMWuUS2-SM-eFkH2pVBsInN_ALQwDQFEuOc"></p><p><span class="image-caption">CHART 1. 10-YEAR SEASONALITY CHART OF XLU VS S&P 500. Against the broader market, March is XLU's strongest month.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p><br></p><p>On average and over 10 years, the Utilities sector (XLU) has outperformed the S&P 500 with an 89% higher-close rate and a 2.9% average return in March. Looking at all 12 months, you will not find a better-performing month than March.</p><h2>XLP's 10-Year Seasonal Performance Against the S&P 500</h2><p><img src="https://lh7-us.googleusercontent.com/C8wib6B1W55cfOdEXqIe0_cnIKDxoqFCK2q4PUgyT5FGbQMHzgY6VIOxcRbgUo6wJM-I48Z0F1f8QpMydyQ0PWSViE0UWe9n4CJKDWuCQUzsqLQ2nx8TmcWiQy2UPoV_uA6OcV-QPTMhwVXjvm52sHc"></p><p><span class="image-caption">CHART 2. 10-YEAR SEASONALITY CHART OF XLP VS S&P 500. March is XLP's second-strongest performance against the S&P following December.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>On average, over 10 years, XLP has outperformed the S&P 500 with a 56% higher-close rate and a 1.3% average return in March. The average higher-close and return rates are strongest in December, but March is XLP's second-best performing month.</p><h2>Using "Safe" Plays as a "Bold" Move</h2><p>Similar to the analogy mentioned above—using a defensive tactic to achieve an aggressive outcome—might it be prudent to shift trading focus to a "caution play" to get ahead of the broader market? Historically and seasonality-wise, this has played out well on average in the last 10 years, but whether the odds are in your favor this year really depends on the whims of market sentiment and whether you can find a sensible entry point in the current price environment.</p><p>After all, March is only a few days away.</p><h2>XLU's Price Action Now</h2><p><img src="https://lh7-us.googleusercontent.com/gEDawk8bCus4aPUpGsjHDnvTrPGctca0BNxM-M2hkmPr9CAbPYiqHLYBo1LvHdGzP8DNnf-oSVgzfOiaX_CghnBmTlLa1O7IAUE6HLvCiqpyNz_LnIcsa50g0q4vuw2_Y-RajF4W6Ic4bSObWyYVAaM"></p><p><span class="image-caption">CHART 3. DAILY CHART OF XLU. The swing chart makes directionality and entry/exit points clear.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>The last two lower lows in January and February coincided with a rise in buying pressure, as indicated by the <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:money_flow_index_mfi" target="_blank">Money Flow Index (MFI)</a><span target="_blank">, which you can also think of as a volume-weighted RSI. The bullish divergence between declining prices and increasing buying pressure foreshadowed this month's price rise.</span></p><p>If you take a look at the <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:zigzag" target="_blank">ZigZag</a><span target="_blank"> lines, you can see the </span><a href="https://school.stockcharts.com/doku.php?id=trading_strategies:swing_charting" target="_blank">swing points</a><span target="_blank"> that define the trend. So, if XLU reverses course and rises to fulfill its seasonality-based projection, it would have to break above the two swing highs (see green dotted lines) at $62.25 and $62.62 to break the current downtrend. It would also have to stay above the most recent swing low (see red dotted line) at $59.15.</span></p><p>If you want to go long XLU, a break above $62.25 on high momentum might be a favorable entry point.</p><h2>XLP's Price Action Now</h2><p><img src="https://lh7-us.googleusercontent.com/tU18i8JJgOaN19BJA7nigTsgDb5KTneIEGHkWC8urwU-jv6d1mc5GW7jAsnO4QFGM0uQI5xY3gn0wMASvnPhHmU28R6Vn8YIAn4kK2jhMv655SlovfQ3-AgtOFkWfx8RpBBp_JikZpFzwpS27FFxfb8"></p><p><span class="image-caption">CHART 4. DAILY CHART OF XLP. Just sailing with no clouds in sight? Otherwise, a seemingly boring chart.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p target="_blank">Consumer Staples (XLP) appears to be chugging along rather serenely. Looking at the <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:relative_strength_index_rsi" target="_blank">Relative Strength Index (RSI)</a><span target="_blank">, XLP is neither overbought nor oversold. It's just there in the middle. To get a clearer and volume-weighted reading, look at the </span><a href="https://school.stockcharts.com/doku.php?id=technical_indicators:money_flow_index_mfi" target="_blank">Money Flow Index (MFI)</a>,<span target="_blank"> which shows pretty much the same thing but with a slight upward tilt, indicating a slight rise in buying pressure.</span></p><p><img src="https://d.stockcharts.com/img/articles/2024/02/27/054c29c1-0f81-43a4-a91b-9df1a48d4f1d.jpg" style="display: block; margin: 0px auto;"></p><p>The chart plots a trendline to show the main trend plus a <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:ichimoku_cloud" target="_blank">Kumo (Ichimoku Cloud)</a><span target="_blank"> for secondary context. Based on all of these readings, XLP gives every indication that it's heading higher. So, if you're looking to go long XLP to take advantage of its seasonality-based expectations, getting in a position near the trendline, say, $73.50 might be a favorable spot. You don't want to see price fall below the trendline, and a close below $72.36, its most recent swing low, would likely invalidate the bullish thesis.</span></p><h2>The Bottom Line</h2><p>The strategic exploitation of Utilities (XLU) and Consumer Staples (XLP) sectors for seasonality-based opportunities is an interesting case in which you'd use defensive tools to seek growth. The timing, as with all trades, is crucial, and the coming month of March, historically the strongest for these sectors, offers a unique window for this strategy. Of course, seasonality is never a sure thing, so if you're planning on pursuing this opportunity, be ready to exit upon the first indications that this season might not follow historical patterns.</p><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>Historical and seasonal performance data indicate that the Utilities and Consumer Staples sectors can be effective growth instruments, particularly in March. Technical analysis of the current price action for Utilities Select Sector SPDR Fund (XLU) and Consumer Staples Select Sector SPDR Fund (XLP) supports the thesis that these sectors are poised for growth, offering traders potentially favorable entry points for capitalizing on this seasonal trend.If the best defense is a strong offense, then sometimes the most effective offense is a defensive tactic used offensively (as Napoleon did...Is Energy About to Undergo a Strong Seasonal Sector Surge?Karl Montevirgentag:stockcharts.com,2024-02-23:post-272562024-02-23T17:58:01Z2024-02-23T17:58:01Z<p><img src="https://d.stockcharts.com/img/articles/2024/02/23/4d4ce6f0-8107-4055-8827-a1bc074fb31d.jpg" style="display: block; margin: 0px auto;"></p><p>When we think about sector rotation, we think about fundamentally-based forecasts linked to the stages of the economic cycle (i.e. business cycle). In contrast, when we think of seasonality forecasts, we think of a technically-based context defined by average historical price performance, typically on a monthly basis.</p><p>Combining both approaches might be an effective way to identify near-term trading opportunities. In short, you'd be looking for sectors which analysts expect to perform well in the coming months, while drilling down on a sector's seasonality patterns to anticipate historically strong months which may be tradable. Finally, you'd check these projections against the current price action to see whether the technicals are favorable for trading.</p><h2>Sectors with the Strongest Near-Term Seasonal Performance</h2><p>Using the SPDR Select Sector ETFs as sector proxies, the three sectors with the strongest seasonal performance in the near term are Energy Select Sector SPDR Fund (<strong>XLE</strong>), Utilities Select Sector SPDR Fund (<strong>XLU</strong>), and Materials Select Sector SPDR Fund (<strong>XLB</strong>).</p><p>In terms of fundamentals, all three are expected to see growth in 2024. Energy faces volatility driven by geopolitical and renewable energy transitions, while the utilities sector is seen as a more stable investment, with a focus on renewables and infrastructure. The materials sector could witness growth, benefiting from favorable supply-demand dynamics, anticipated interest rate changes, and attractive valuations.</p><h2>Seasonal Performance vs. the S&P 500</h2><p>When you're making investing or trading decisions based on seasonality patterns, it's always a good idea to check an asset's seasonal performance against the broader market. Even if an asset (or, in our case, a sector) performs well in a given month based on its own history, that might not mean much if it underperforms the S&P 500. You're facing an opportunity cost in which you might benefit from trading another asset.</p><p>XLE, XLU, and XLB all have strong 10-year seasonal performance in April, which is coming up soon. Let's take a broader look at their performances and compare it with the broader market (see table below).</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/23/51cf0db6-6ffb-4984-b7d7-a005528685bd.jpg" style="display: block; margin: 0px auto;"></p><p>Looking at the stats above, XLE is the strongest performer. While XLB's average return is higher than XLU, when compared with the S&P 500, XLB underperforms XLU. Let's focus on the top performer, XLE.</p><h2>XLE's Seasonality Profile</h2><p>Using StockCharts' Seasonality Profile chart, let's take a closer look at XLE's 10-year performance.</p><p><img src="https://lh7-us.googleusercontent.com/gK13CdILCaM41-Ni-Ikw_waVYWHm3D85u0hosRhrSyj5lyhoCiNMTmfXx70MjPUTY5zm0tmdpFwtXUa-3728dx85x4-gDsheEhmimwH6d-cXf9iTzWaxIAid9xUIjvFHHZNX8_clIeHmFx1KUI7ftdg"></p><p><span class="image-caption">CHART 1. XLE'S 10-YEAR SEASONALITY PROFILE. Just because a given month has a higher close percentage doesn't mean it's a favorable month to trade. You have to look at its average return (bottom of the bar) and compare both figures across all other months. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>While XLE has a higher-close rate of 67% in both March and April over a 10-year period, its average return in April (6.1%) far exceeds the average negative return (-1.2%) in March. <em>April is XLE's strongest seasonal month</em>.</p><p>But what do these stats mean when compared with the S&P 500? Does it outperform or underperform the broader market?</p><p><img src="https://lh7-us.googleusercontent.com/RBmVPVMojldccqdOoUgYrayVUn-x87r4W8d4zcGELFfljb89h8hKgtk-l5piQPikZANNNo5EnLnHFSA7tpArPLL5Y5wk6nOBivQArCkfPWpcB3LZBjQod3sTxFwf5MC7ztyxoUOcFZWMrEpQr31h-eY"></p><p><span class="image-caption">CHART 2. XLE'S 10-YEAR SEASONAL PERFORMANCE COMPARED WITH THE S&P 500. When you view seasonality using relative performance, things can sometimes change drastically. In the case of XLE, March is still weak, April is still its strongest month, and the higher close rate in April is the same compared to the S&P 500.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Looking at XLE's relative seasonal performance against the broader market, you can see that it outperforms the S&P 500 in the month of April (4.2%) while maintaining its 67% rate of higher closes.</p><h2>Is XLE's March Weakness a Setup for an April Surge?</h2><p>Looking at a daily chart of XLE, you can see that it has been trading sideways since the middle of October.</p><p><img src="https://lh7-us.googleusercontent.com/H3XWA5nyTi418saaW4qTqwnJXtxnnpQqrDtYUt8SbSQE5BS8ADiPGFF7ycMsHjTBn-DbKx1sXl_OqGRneGaZ8D9CtnetqBUA1vuKy4bWSSIJ4muVVcfwoVDG899i5i8_OJOCqLQ0hwVMrS_QoAofYiY"></p><p><span class="image-caption">CHART 3. DAILY CHART OF XLE. All indicators on the chart serve a purpose in terms of support and confluence: gauging momentum, buying pressure, and identifying a potential support range. Chart source: StockCharts.com. For educational purposes.</span></p><p target="_blank">While prices have surged, XLE also closed above the <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:bollinger_bands" target="_blank">upper Bollinger Band</a><span target="_blank">® earlier in the week. A close above the band (2nd standard deviation) signals a strong potential for prices to decline, possibly toward the middle band.</span></p><p target="_blank">There's also a bearish divergence in the <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:stochastic_oscillator_fast_slow_and_full" target="_blank">Stochastic Oscillator</a><span target="_blank"> (see blue dashed line), which has declined while still giving an overbought signal. Both signals indicate the likelihood that XLE may be dipping soon.</span></p><p><img src="https://d.stockcharts.com/img/articles/2024/02/23/fd467648-b157-4262-b864-96408ba7cfcc.jpg" style="display: inline; margin: 0px 15px; float: right; width: 550px;" onclick="window.open('https://stockcharts.com/')"></p><p>On the bullish side, you can also see from the <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:chaikin_money_flow_cmf" target="_blank">Chaikin Money Flow</a><span target="_blank"> (CMF) that buying pressure has ramped up and is still far above the zero line. Meanwhile, an </span><a href="https://school.stockcharts.com/doku.php?id=technical_indicators:ichimoku_cloud" target="_blank">Ichimoku Cloud</a><span target="_blank"> is plotted in the chart to provide some trend context (which is slightly bullish) and a possible range for support.</span></p><p>So, if you're bullish on XLE and agree with the seasonal March weakness and April strength thesis, you'd probably wait for prices to fall between $83 and $84 in the coming month. Set a price alert at $85 to alert you to a potential trade.</p><p>The $83 to $84 level would coincide with the lower or middle Bollinger Band (<em>if</em> prices decline) and the cloud itself (the space between Senkou Span A and Senkou Span B). Preferably, you'd see a decline in the Stochastic Oscillator while the buying pressure on the CMF maintains itself above the zero line. Next, you'd look for an upward reversal on strong momentum before deciding where, exactly, to place your buy stop (there are many ways to determine this, and it depends on your trading methodology).</p><h2>The Bottom Line: The Challenge of Using Seasonality Profiles</h2><p>StockCharts' Grayson Roze, <a href="https://www.youtube.com/watch?v=kd5VEFvpveg" target="_blank">in his video explaining how to use the company's seasonality charts</a><span target="_blank">, makes it clear that seasonality is an effective tool for </span><em target="_blank">contextualization</em><span target="_blank">. </span>This means that you already have a trade idea, and you use its seasonality profile to gain more information that may help you evaluate the odds of your trading thesis.</p><p>However, starting with the seasonality chart to <em>generate</em> trading ideas can prove more challenging and problematic when the technicals don't suggest an immediate trading opportunity. Nevertheless, if seasonal consistency takes place, you've potentially unlocked an opportunity that other traders might not have expected.</p><p>Sectors rotate on a long-term basis in relation to the business cycle and on a short-term basis in relation to the intra-year supply/demand situation of the businesses they comprise. So, there may be an adequate reason to trade sectors on a short-term basis in response to their seasonal demand.</p><p>It may be difficult to decipher at times. Still, if a seasonality reading gives you an edge in anticipating a potential near-term move, it might be well worth the small effort it takes to analyze its seasonality profile.</p><hr><h3 style="color:red;">How to Access the StockCharts Seasonality Tool</h3><p>There are different ways to access the seasonality tool in StockCharts.</p><ul><li>Click the <strong>Charts & Tools</strong> tab at the top of the StockCharts page, enter a symbol in the Seasonality panel, and click "Go."</li><li>Enter the symbol in the <strong>ChartBar</strong> at the top of the page and select "Seasonality" from the dropdown menu on the left.</li><li>From <strong>Your Dashboard</strong>, in <strong>Member Tools</strong>, click on <strong>Seasonality</strong>.</li><li>Below the seasonality chart, you'll find links to instructions and quick tips that give more detailed instructions.</li></ul><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>When we think about sector rotation, we think about fundamentally-based forecasts linked to the stages of the economic cycle (i.e. business cycle). In contrast, when we think of seasonality forecasts, we think of a technically-based context defined by average historical price performance, typically on a monthly basis.Combining both approaches might be an effective way to identify near-term trading opportunities. In short, you'd be looking for sectors which analysts expect to perform well in the coming months, while drilling down on a sector's seasonality patterns to anticipate historically...S&P 500's Sensational Rally Keeps On Going Thanks to NVDA — What You Need to WatchJayanthi Gopalakrishnantag:stockcharts.com,2024-02-22:post-272502024-02-23T13:41:23Z2024-02-22T21:36:24Z<p><img src="https://d.stockcharts.com/img/articles/2024/02/22/9023f55e-5530-4882-ae50-8666f7b2518f.jpg" style="display: block; margin: 0px auto;"></p><p>Well, Nvidia did it! A stellar earnings report from NVDA brought back optimism in the stock market. When a stock rises around 15% (for NVDA, that's about a $100 rise in its price), it's an indication that investors still have tons of optimism. Equity futures were up ahead of the open on Thursday. The S&P 500 ($PX) gapped up, hitting a new all-time high. Looking at the daily chart of the S&P 500, the index has bounced off its 21-day <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages" target="_blank">exponential moving average</a> (EMA) a few times since the beginning of its steep rally in November 2023.</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/22/0c51313e-f1a6-40c2-b0d5-00299b091961.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1. DAILY CHART OF THE S&P 500 ($SPX) INDEX. From November 2023, the index has been holding on to the support of its 21-day exponential moving average as it keeps hitting new highs.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Consider the 21-day EMA as a first support level. If the EMA support holds, you can consider the market in a bull rally. NVDA's strong guidance for the next two years shook off all investor worries. It almost seems that interest rate cuts are no longer front and center of investors' minds. Even Thursday's higher-than-estimated jobless claims number didn't sway investor optimism. The worries will likely surface if the S&P 500 breaks below the 21-day EMA, at which time you'd have to look for that next support level, which could be the 50-day simple moving average.</p><p>The CBOE Volatility Index ($VIX) slowly rose and gapped lower on Thursday. The VIX has shown some exciting movement in the last few months, with wide-ranging days and lots of up-and-down movement.</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/22/c4cefd9f-6b42-46d6-8729-88d160549877.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2. DAILY CHART OF THE CBOE VOLATILITY INDEX ($VIX). The VIX has had some wide-ranging days, with many up-and-down movements that appear to be moving within an upward channel.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>The slightly upward trending move in the VIX is not evident when you look at a longer-term chart of the VIX. When you view a monthly chart from 2000, before the most recent spikes—the Great Recession in 2008 and the COVID Crash in 2020—the VIX was much more volatile than it is now. Note that it rose before spiking >80. There are no similar signs of that right now, but watching the VIX regularly is always a good idea, as it can tell plenty about investor sentiment and send warning signs before a crash.</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/22/56b12a93-fba9-4e5a-a6d0-9e835fe3f123.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3. MONTHLY CHART OF VIX FROM 2000. Note the erratic movements in the VIX before the spikes; it also starts rising before the spike. These are two main reasons to keep an eye on the VIX.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>In other news, existing home sales in January rose, another sign the economy is still healthy. One month's data doesn't make a trend and, given that mortgage rates have risen, there may be a decline in February's number. Or maybe not. The chart below of the US 30-year Fixed Rate Mortgage shows a slight increase in mortgage rates in February.</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/22/a5757c93-6ff5-45c3-a9db-b8158e338036.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 4. 30-YEAR FIXED-RTE MORTGAGE AVERAGE IN THE US. After a sharp decline, mortgage rates rose in February. Will this rise have an impact on home sales?</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><h2>The Bottom Line</h2><p>Equities are the favorite among investors and will likely remain this way as long as AI continues to excite investors. And if NVDA continues to rise the way it has this year, the S&P 500 will ride along with it.</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/22/b1f68457-e5c3-48a2-985b-762be18f53d5.jpg" style="display: block; margin: 0px auto;" onclick="window.open('https://stockcharts.com/')"></p><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>Well, Nvidia did it! A stellar earnings report from NVDA brought back optimism in the stock market. When a stock rises around 15% (for NVDA, that's about a $100 rise in its price), it's an indication that investors still have tons of optimism. Equity futures were up ahead of the open on Thursday. The S&P 500 ($PX) gapped up, hitting a new all-time high. Looking at the daily chart of the S&P 500, the index has bounced off its 21-day exponential moving average (EMA) a few times since the beginning of its steep rally in November 2023.CHART 1. DAILY CHART OF THE S&P 500 ($SPX)...How To Buy Meta at a Bargain: An Options Strategy You Need to KnowJayanthi Gopalakrishnantag:stockcharts.com,2024-02-15:post-272162024-02-15T19:08:00Z2024-02-15T19:08:00Z<p><img src="https://d.stockcharts.com/img/articles/2024/02/15/bbf901d4-5eba-4116-969b-cc1b31c3fe06.jpg" style="display: block; margin: 0px auto;"></p><p>Meta Platforms, Inc. (META) is one of the top S&P 500 performers this year. You probably want to own some shares of it—but not at that $485 price tag.</p><p>In an overextended stock market, with the biggest tail risk being inflation, it's not surprising to see selloffs in the stock market after CPI numbers that reveal that inflation remains a concern. We saw such a selloff after January's CPI number. After the selloff, buyers took advantage of the lower prices, and buying pressure increased. This activity is called a shakeout; we will see more of these as more economic data is reported between Fed meetings.</p><p>Pullbacks are a great opportunity to pick up equities and, if META stock falls, you could pick up 100 shares of META by <a href="https://stockcharts.com/articles/chartwatchers/2023/08/introducing-cash-secured-puts-649.html" target="_blank">selling cash-secured puts</a>.</p><h2>What's a Cash-Secured Put?</h2><p>It's when you sell a put option and set aside cash in your account to cover buying 100 shares of the stock if you get assigned. Here's how it works.</p><p>Let's say you want to buy 100 shares of META. When you pull up the daily chart, you can see that META's price gapped up after its recent earnings.</p><p target="_blank"><img src="https://d.stockcharts.com/img/articles/2024/02/15/9a129018-faa9-46ff-a2f5-686d269cab01.jpg" style="display: block; margin: 0px auto;"><span class="image-caption">CHART 1. DAILY CHART OF META PLATFORMS STOCK. After its last earnings, Meta's stock price gapped up. Is there a chance that the price will fall and fill the gap up, or could the stock price fall to its 20-day simple moving average (SMA)?</span><em><span class="image-caption">Chart source: StockChartsACP. For educational purposes.</span></em> There's a chance the gap will get filled. That means Meta's price could also go as low as $406, the high before the gap up after the company's most recent earnings report. Another scenario is that META could find <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages:trading_support_resistance" target="_blank">support at its 20-day simple moving average</a><span target="_blank"> (SMA), bringing the price to around $430. If the price fell to these levels, you could pick up 100 shares of META at a lower price, plus a bonus.</span></p><p><span target="_blank">Bring up a chart of META in StockCharts and view the options chain for META. The chart below is from StockChartsACP. Select the expiration date (in this example, the March 28 expiration is displayed), and adjust the strike range to reflect the price range of your interest.</span></p><p target="_blank"><span target="_blank"><img src="https://d.stockcharts.com/img/articles/2024/02/15/7dc2711f-f76a-4eb8-b1db-e27284a094bf.jpg" style="display: block; margin: 0px auto;"></span></p><p><span target="_blank"><span class="image-caption">CHART 2. OPTIONS CHAIN FOR MARCH 28, 2024. The 404 put strikes have a bid price of $1.34, whereas the 430 put strikes have a bid price of $3.30.</span></span><em target="_blank"><span class="image-caption">Chart source: StockChartsACP.com. For educational purposes.</span></em><span target="_blank"> Looking at the options chain, the 405 strike has a bid price of $1.34 and a delta of -0.04, which means there's about a 96% probability the option will expire </span><a href="https://school.stockcharts.com/doku.php?id=glossary_options" target="_blank">out of the money</a><span target="_blank"> (OTM). The 430 strike has a bid price of $3.30 with a delta of -0.13 or around an 87% probability of expiring OTM. You can go down the chain and analyze the other strike prices.</span></p><p>If you want to purchase the stock at either of these prices, you want it to be <a href="https://school.stockcharts.com/doku.php?id=glossary_options" target="_blank">in the money,</a> but remember, these values change drastically from one day to the next. For this example, we'll stick to the 405 and 430 strikes, since they coincide with support levels on the price chart. This will also help you understand how options work. Explore the different options chains and decide which strikes and expirations are best for your objectives.</p><h2>Applying the Cash-Secured Put Strategy</h2><p><img src="https://d.stockcharts.com/img/articles/2024/02/15/196ceb79-8a30-4df6-83ca-f62224492b74.jpg" style="display: inline; margin: 0px 15px; float: right; width: 500px;" onclick="window.open('https://stockcharts.com/')"></p><p>If you sell the March 28 405 strike puts, you'd collect $134 in premium. Remember, one option contract represents 100 shares of the underlying security. If Meta's stock price stays above $405 before your option contract expires, you keep the $134. If the stock price falls below $405 before your contract expires, you'll have to buy 100 shares of META for $405 per share. This is why you must have the cash—in this case, $40,500 (less transaction costs) in your trading account—before you sell the put contract.</p><p>If you sell the March 28 430 puts, you will collect $330 in premium. If META closes below $430 before the contract expires, you have to buy 100 shares of META for $430 per share. You'll have to have $43,000 in your trading account. You get the idea.</p><p>Analyze the options chain for other stocks that are on your wish list. You could buy the stock at a price lower than where it is trading and keep the premium. <strong>The downside:</strong> You get assigned, buy 100 shares of META, and the stock price falls further.</p><h2>You've Got Lots of Options</h2><p>You want to sell puts that give you a decent premium, so don't sell something with too low of a price. That's not worth the time you'll have your cash sitting idle, waiting to purchase the stock if it drops to your selected strike price. And if you want to own the stock, you want to pick a strike price the stock is likely to reach. The same goes for expiration dates. Choose one that makes sense to you. Typically, it's best to analyze options with about 30–45 days to expiration, but that's not written in stone. Check out the options chains for further expirations and determine your sweet spot.</p><p>Options provide a ton of flexibility. There's some art and science in deciding which options strike to trade. Once you decide which put to sell, and if you have a Tradier account, link directly to your trading account and place your trade. Then, monitor the stock price. </p><hr><h3 style="color:red;">Get Started With StockChartsACP</h3><p target="_blank">StockChartsACP is a <a href="https://support.stockcharts.com/doku.php?id=acp" target="_blank">comprehensive and interactive charting platform</a><span target="_blank"> with tons of dynamic capabilities. Check out the video below for a guided tour.</span></p><div class="embed-responsive embed-responsive-16by9"><iframe class="embed-responsive-item" src="//www.youtube.com/embed/l6MIAUPdTqo" frameborder="0" width="640" height="360" allow="accelerometer;autoplay;encrypted-media;gyroscope;picture-in-picture;" allowfullscreen="true"></iframe></div><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>Meta Platforms, Inc. (META) is one of the top S&P 500 performers this year. You probably want to own some shares of it—but not at that $485 price tag.In an overextended stock market, with the biggest tail risk being inflation, it's not surprising to see selloffs in the stock market after CPI numbers that reveal that inflation remains a concern. We saw such a selloff after January's CPI number. After the selloff, buyers took advantage of the lower prices, and buying pressure increased. This activity is called a shakeout; we will see more of these as more economic data is reported...S&P 500, Dow Jones Hit All-Time Highs Again; Tech Stocks Back in the SpotlightJayanthi Gopalakrishnantag:stockcharts.com,2024-02-02:post-271572024-02-02T23:44:33Z2024-02-02T23:44:33Z<p><img src="https://d.stockcharts.com/img/articles/2024/02/02/49b9b194-579d-4657-8c72-7af88d432b5e.jpg" style="display: block; margin: 0px auto;"></p><p>What a week! Mega-cap tech stocks, the Fed meeting, and January's nonfarm payrolls made headlines this week, creating an exhilarating week for investors. Friday's stock market price action was an unexpected, but optimistic end to the trading week.</p><h2>Jobs, Jobs, Jobs</h2><p>The January jobs report came in way better than expected, and you'd think that would lead to a selloff <a href="https://stockcharts.com/articles/chartwatchers/2024/01/sp-500-falls-nears-first-suppo-669.html" target="_blank">after Fed Chairman Powell's comments</a><span target="_blank"> on Wednesday. Yet investor optimism prevailed, and the broader stock market indices closed higher, with the S&P 500 ($SPX), Dow Jones Industrial Average ($INDU), and Nasdaq 100 ($NDX) closing at an all-time high. It's beginning to sound like a broken record, almost as if the stock market is waiting for the Nasdaq Composite to catch up and notch a new record high.</span></p><p>The blowout jobs report from the Bureau of Labor Statistics showed that the US economy added 353,000 jobs, well above the 185,000 estimate. The unemployment rate was 3.7%, slightly lower than the expected 3.8%. Wage growth also rose.</p><p>Thus, a combination of more jobs and higher wages buries even the slightest probability of a March rate cut. May is still a ways away, and plenty of data will come out before then, but it would be surprising if anything moves the needle enough to warrant a rate cut in March.</p><p>A strong labor market is great for the economy. The question is whether it aligns with what the FOMC wants to see—a rebalancing of the labor market. It's possible that a rebalance between supply and demand of jobs will occur, given that hours worked per week fell to 34.1. If that continues to fall, and companies start cutting jobs, that would indicate a rebalancing. Another data point to focus on is the number of people working or available for work. If that also declines, it would be further confirmation that the supply and demand forces of the labor market are coming more into equilibrium. But we won't know that for a while, and investors seem to have shifted their focus to the present.</p><h2>Tech Stocks Back In Focus</h2><p>The stock market didn't seem worried about the stellar jobs report, and Chairman Powell's comments are now in the rearview mirror. The broader market indices closed higher, with big tech stocks in the spotlight. Earnings from <strong>Alphabet</strong> (GOOGL), <strong>Microsoft</strong> (MSFT), <strong>Amazon</strong> (AMZN), <strong>Apple</strong> (AAPL), and <strong>Meta Platforms</strong> (META) were mixed, but that didn't stop tech stocks from being the stars at the tail end of the trading week. AI is still the buzzword that fuels this market.</p><p>Consumer demand is strong, as reflected by Amazon's earnings on Thursday. And META, which reported strong Q4 earnings and positive Q1 guidance, soared after Thursday's close. But that wasn't all; META will be issuing a quarterly dividend of $0.50 per share for the first time. This news boosted the stock price higher, and META closed at $474.99 per share, up 20.32%, hitting an all-time high. That's a $197 billion addition to its market cap.</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/02/5d17b943-7dee-4821-b0c2-8e6f74d9d8e6.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1. META STOCK SOARS ON EARNINGS AND DIVIDENDS. Meta notches an all-time high on strong earnings, guidance, and news of dividends to shareholders.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>One area of the market that struggles to keep up with the broad indices is small caps. Small-cap stocks tend to perform better in a lower interest rate environment, and since rate cuts aren't on the Fed's radar at the moment, the S&P 600 Small Cap Index ($SML) was one of the few reds in the <strong>Market Overview</strong> panel in the StockCharts dashboard.</p><p>Speaking of interest rates, the 10-year US Treasury yield chart paints a good picture (see below). The 10-year yield is back above 4% after sharply falling and hitting a low of 3.817%.</p><p><img src="https://d.stockcharts.com/img/articles/2024/02/02/ae205fd7-45ac-40ef-aabf-a09f9025e52c.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2. 10-YEAR TREASURY YIELD SPIKES. The strong January jobs report sent the benchmark 10-year US Treasury Yield Index spiking. In spite of the big jump, the yield closed lower for the week.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Today's move in yields didn't help bond prices. The iShares 20+ Year Treasury Bond ETF (TLT) was down 2.21%.</p><h2>The Bottom Line</h2><p>Overall, 2024 has started positively, which is good for stocks. Hearing some of the takeaways from the Fed speeches next week will be interesting. After this week's performance, maybe the market won't be impacted by rate cut delays. This stock market just keeps going and going; if delaying rate cuts isn't going to stop it, what will?</p><p>Next week is another week. If you're considering adding positions to your portfolio, take advantage of any pullbacks while the market trends higher. Only if there's a drastic turn of events should you think otherwise.</p><h2>End-of-Week Wrap-Up</h2><p><img src="https://d.stockcharts.com/img/articles/2024/02/02/c6b7b2fb-a711-43c1-b9fa-ec03f5ae6930.jpg" style="display: inline; margin: 0px 15px; float: right; width: 550px;" onclick="window.open('https://stockcharts.com/')"></p><ul><li>S&P 500 closes up 1.07% at 4,958.61, Dow Jones Industrial Average up 0.35% at 38,654.42; Nasdaq Composite up 1.74% at 15,628.95</li><li>$VIX down 0.22% at 13.85</li><li>Best performing sector for the week: Consumer Discretionary</li><li>Worst performing sector for the week: Energy</li><li>Top 5 Large Cap <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:sctr" target="_blank">SCTR</a><span target="_blank"> stocks: Super Micro Computer, Inc. (SMCI); Affirm Holdings (AFRM); CrowdStrike Holdings (CRWD); Veritiv Holdings, LLC (VRT); Nutanix Inc. (NTNX)</span></li></ul><h2><strong>On the Radar Next Week</strong></h2><ul><li>Earnings week continues with Walt Disney Co. (DIS), Gilead Sciences (GILD), Alibaba Group Holding (BABA), Eli Lilly (LLY), and Snap Inc. (SNAP) reporting.</li><li>January PMI and ISM</li><li>Fed speeches</li><li>November S&P/Case-Shiller Home Price</li><li>Fed Interest Rate Decision</li></ul><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>What a week! Mega-cap tech stocks, the Fed meeting, and January's nonfarm payrolls made headlines this week, creating an exhilarating week for investors. Friday's stock market price action was an unexpected, but optimistic end to the trading week.Jobs, Jobs, JobsThe January jobs report came in way better than expected, and you'd think that would lead to a selloff after Fed Chairman Powell's comments on Wednesday. Yet investor optimism prevailed, and the broader stock market indices closed higher, with the S&P 500 ($SPX), Dow Jones Industrial Average ($INDU), and Nasdaq 100 ($NDX)...S&P 500 Falls, Nears First Support Level -- How Much Lower Can It Go?Jayanthi Gopalakrishnantag:stockcharts.com,2024-02-01:post-271422024-02-01T00:15:50Z2024-02-01T00:15:50Z<p><img src="https://d.stockcharts.com/img/articles/2024/01/31/0318ac00-86e0-4baa-a45d-fd9d1c1c402d.jpg" style="display: block; margin: 0px auto;"></p><p>Will the Fed cut interest rates at their March meeting? Investors were looking for an answer from Fed Chairman Jerome Powell when he took the podium today. Alas, Powell was noncommittal to that, which wasn't what the stock market wanted to hear.</p><p>The broad stock market indexes—the Dow Jones Industrial Average ($INDU), S&P 500 ($SPX), and Nasdaq Composite ($COMPQ)—fell even further after Powell took the podium. All three indexes closed lower today—the S&P 500 down 1.61%, the Dow Jones Industrial Average down 0.82%, and the Nasdaq Composite down by 2.23%. Communication Services and Technology sectors were the worst-performing sectors today. </p><p>The daily chart of the S&P 500 below shows that, in spite of today's decline, the index is still in an uptrend. The Fibonacci retracement level annotation from the January 4, 2022 high to the October 13, 2022 low shows the 100% retracement level coinciding with the 21-day <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages" target="_blank">exponential moving average</a><span target="_blank"> (EMA). This could be the first support level to watch for. If the S&P 500 continues lower and hits its 50-day simple moving average (SMA), the uptrend would no longer be valid, and you'd have to look for price action at the next support level. As it stands now, it could be the 50-day SMA, but that could change.</span></p><p><img src="https://lh7-us.googleusercontent.com/0j2GMnfJjU_g-Q-o4B7ZM63yTnyEzzcCBtEKgI1WbyprkVTYxdM_CebZl_x6IOYlOydgYrGYnJZuGQ2wICj2xSnokbFSpfrEPBgTCI6wu2UN2Dq7JhvVvLjMZGbUbSfKhJEpUK9QZt_l0mJfYE2tG_Y"></p><p><span class="image-caption">CHART 1. S&P 500 INDEX CLOSE TO ITS FIRST SUPPORT LEVEL. The 21-day exponential moving and the 100% Fibonacci retracement level coincide at around 4825. The S&P 500 closed at 4845.65 on Wednesday. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><h2>Fed Speak</h2><p>Today's price action indicates how heavily the stock market had priced in a March rate cut. Prior to today's presser, according to the <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" target="_blank">CME Fedwatch Tool</a><span target="_blank">, there was about a 50% probability of a rate cut in March. But since then, the likelihood of a rate cut has dropped to around 36%.</span></p><p>Even though Chairman Powell stated that the economy has made good progress, the supply and demand conditions in the labor market have come into better balance, and inflation has eased, the Federal Open Market Committee (FOMC) needs greater confidence that inflation is moving toward their 2% target.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/31/ec219b29-a82e-415f-9ac9-e5dae3ace8b5.jpg" style="display: inline; margin: 0px 15px; float: right; width: 550px;" onclick="window.open('https://stockcharts.com/')"></p><p>Powell stated that the Fed is in "risk management" mode, and the timing of rate cuts is critical. Too soon may reverse the progress made so far. As a result, the Fed is prepared to hold the interest rate steady for longer if needed. The decision, as always, is data-dependent.</p><p>One point Powell brought up several times is the labor market's strength. That area is strong, but wants to see the supply and demand forces come into balance. Today's ADP private-sector jobs report showed lower-than-expected new jobs. Let's see what Friday's January jobs report reveals, as, after hearing from Powell today, investors will pay close attention to Friday's data. One more month of encouraging data is a move toward interest rate cuts, maybe not in March, but possibly in May. But if the labor market keeps getting stronger, expect further selling to take place.</p><p>Another point Powell brought up is the Fed continues to be committed to bringing inflation down to 2%. The risk is that inflation could stabilize above 2%, so the FOMC is not rushing to cut rates.</p><p>The benchmark 10-year US Treasury Yield Index ($TNX) fell on Wednesday (see chart below), closing at 3.97%, near its January 12 close.</p><p><img src="https://lh7-us.googleusercontent.com/P-g9wIz9guJ0ybAsvTrnXnHpqN0oVybaY1vVupk0JJJ1ghFCHeboZfHaWVnjdXKIY0HX6dSPsAo5As0ApPa2F4t3-kPuHEm4PxYK0nVHnQXofUDvpRbSxWZRpbhuz0UrwKeLgYsAFUZa2-OhpSLOB78"></p><p><span class="image-caption">CHART 2. DAILY CHART OF 10-YEAR US TREASURY YIELD INDEX. A fall in yields is related to the government's funding plan. How much further can the 10-year yield fall?</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>On another note, shares of Alphabet (GOOGL), Microsoft (MSFT), and Advanced Micro Devices (AMD) all fell after the companies reported their quarterly earnings after Tuesday's close. </p><p>Does today's decline mean we'll see a correction? One day doesn't make a trend, so watch the support area on the S&P 500 and other indexes. The economy is still strong and, for as long as that's the case, it's likely stocks will hit a support level and rebound.</p><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>Will the Fed cut interest rates at their March meeting? Investors were looking for an answer from Fed Chairman Jerome Powell when he took the podium today. Alas, Powell was noncommittal to that, which wasn't what the stock market wanted to hear.The broad stock market indexes—the Dow Jones Industrial Average ($INDU), S&P 500 ($SPX), and Nasdaq Composite ($COMPQ)—fell even further after Powell took the podium. All three indexes closed lower today—the S&P 500 down 1.61%, the Dow Jones Industrial Average down 0.82%, and the Nasdaq Composite down by 2.23%. Communication Services and...Stock Market Indexes Keep Setting New Highs: How Much Higher?Jayanthi Gopalakrishnantag:stockcharts.com,2024-01-26:post-271162024-01-26T23:05:39Z2024-01-26T23:05:39Z<p><img src="https://d.stockcharts.com/img/articles/2024/01/26/27d7596a-f37c-480a-b317-4b156877dba6.jpg" style="display: block; margin: 0px auto;"></p><p>In the first week of 2024, investors seemed uncertain that the stock market would continue the tail end of 2023 rally. But here we are, three weeks later, and the S&P 500 Index ($SPX) notches new record highs five trading sessions in a row. The last time this happened? November 2021.</p><p>It would have been nice to see the S&P 500 hit a record close to finish the trading week. It came so close. </p><p>Investors don't seem to be worried about anything right now. The CBOE Volatility Index ($VIX) remains relatively low at 13.29. This week, we received insight into some key economic data, which indicated, overall, that the US economy is slowing. This was good news for the stock market, which keeps going and going.</p><p>The Fed's most trusted inflation data point, the Personal-Consumption Expenditures (PCE) increased by 2.9%, below the 3.0% estimate. But consumer spending went up 0.7% in December, higher than expected. Consumers continued to shop, even though personal income was flat. Where's the money coming from?</p><p>Earlier in the week, the Q4 GDP was released, indicating the US economy grew at a 3.3% annual rate in the fourth quarter. It's higher than economists estimated, but it's also slower than Q3's growth, which was 4.9%.</p><p>So, overall, the data leading up to this week suggests that inflation has softened while the US economy is still strong. However, the growth is decelerating. Does that mean the US will see a soft landing? It's probably too early to tell, but it's something to listen for when Chairman Powell takes the podium next week after the Federal Reserve decision on interest rates.</p><p>The Fed is expected to hold interest rates steady in their next meeting, but investors will be listening for any clues hinting when rate cuts will start. According to the <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" target="_blank">CME FedWatch Tool</a><span target="_blank">, there's about a 50% probability of the Fed cutting rates by 25 basis points in their March meeting.</span></p><h2>Equities Still Rising</h2><p>The stock market seems to be content with how the economy is performing. The S&P 500 ($SPX) and Dow Jones Industrial Average ($INDU) have been notching new highs this week. Technology stocks are back in favor, with many Tech and Communication Services reporting earnings next week. Intel's disappointing guidance may have dampened the enthusiasm in Tech, but overall, the sector has been rallying. The Invesco QQQ Trust (QQQ) has been rising since late October 2023 (see chart below).</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/26/72acafaf-091e-47a5-ac3c-33971ca8b5d1.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1. DAILY CHART OF QQQ. QQQ has been moving in an upward-sloping channel. A break above or below this channel can be an indication to which direction the QQQ will move.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Next week, some key tech players will be reporting earnings. Chip stocks are under pressure after Intel's and KLA Corp's weaker guidance. Investors will be closely listening to AMD's earnings next week. Will AMD provide guidance similar to Intel's? If it does, it will send a negative sentiment rippling through the sector. Watch the upward-sloping channel in the QQQ; a break above or below the channel will be an indication of which direction the QQQ will move.</p><p>This is why investors should always look at the broad picture when analyzing the stock market.</p><p target="_blank">One useful indicator to follow is the <a href="https://school.stockcharts.com/doku.php?id=market_indicators:bullish_percent_index" target="_blank">Bullish Percent Index</a><span target="_blank"> (BPI). It's helpful to have a ChartList of the BPI for the different sectors and major indexes. Looking through the BPI for the 11 S&P sectors, as of now, Consumer Staples, Utilities, and Energy are the only three sectors favoring the bears. But that could change.</span></p><h2>Fed Week On the Radar</h2><p>Interestingly, despite the rise in equities, the benchmark US 10-year Treasury yield ($TNX) has stabilized at around the 4.0–4.2% range. Is the bond market telling us something we may not know?</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/26/bafa3cb9-0b78-41f9-bf3b-45f09b103e60.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2. 10-YEAR US TREASURY YIELD STABILIZING. Watch the 10-year Treasury yields as we head into Fed week. They could be telling you something you may have missed.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Next week could bring some volatility, with several of the Magnificent Seven reporting next week and the FOMC meeting. </p><h2>End-of-Week Wrap-Up</h2><p><img src="https://d.stockcharts.com/img/articles/2024/01/26/e8b36d65-e456-4ddb-ae70-8c2c17d45685.jpg" style="display: inline; margin: 0px 15px; float: right; width: 550px;" onclick="window.open('https://stockcharts.com/')"></p><ul><li>S&P 500 down 0.07% at 38109.43, Dow Jones Industrial Average up 0.16% ; Nasdaq Composite down 0.36% at 15455.36</li><li>$VIX down 1.41% at 13.26</li><li>Best performing sector for the week: Energy</li><li>Worst performing sector for the week: Consumer Discretionary</li><li>Top 5 Large Cap <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:sctr" target="_blank">SCTR</a><span target="_blank"> stocks: Affirm Holdings (AFRM), Super Micro Computer, Inc. (SMCI); Veritiv Holdings, LLC (VRT); Nutanix Inc. (NTNX); CrowdStrike Holdings (CRWD)</span></li></ul><p><strong>On the Radar Next Week</strong></p><ul><li>Earnings week continues, with Advanced Micro Devices (AMD), Alphabet Inc. (GOOGL), Microsoft Corp. (MSFT), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), and Meta Platforms, Inc. (META) reporting. </li><li>Federal Reserve Interest Rate decision</li><li>Jan Non-Farm Payrolls (NFP)</li><li>November S&P/Case-Shiller Home Prices</li><li>Fed Interest Rate Decision</li></ul><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>In the first week of 2024, investors seemed uncertain that the stock market would continue the tail end of 2023 rally. But here we are, three weeks later, and the S&P 500 Index ($SPX) notches new record highs five trading sessions in a row. The last time this happened? November 2021.It would have been nice to see the S&P 500 hit a record close to finish the trading week. It came so close. Investors don't seem to be worried about anything right now. The CBOE Volatility Index ($VIX) remains relatively low at 13.29. This week, we received insight into some key economic data...Dow Jones and S&P 500 Close At Record High -- Time to Add Tech Stocks To Your Portfolio?Jayanthi Gopalakrishnantag:stockcharts.com,2024-01-20:post-270772024-01-20T00:04:14Z2024-01-20T00:04:14Z<p><img src="https://d.stockcharts.com/img/articles/2024/01/19/146eb780-fd86-47fb-a031-8c0a3dffd971.jpg" style="display: block; margin: 0px auto;"></p><p>Tech stocks are striking back after a rough start in the first week of the trading year. Back then, it might have been inconceivable to think that tech stocks would lead a bullish rally, but that narrative has changed quickly. Today's continuation of yesterday's strong rally boosted the broader equity indices, while the Dow Jones Industrial Average ($INDU) and S&P 500 ($SPX) closed at record highs, and the Nasdaq Composite ($COMPQ) clinched a new 52-week high.</p><p>Chip stocks continued to gain momentum after yesterday's explosive rally, which followed Taiwan Semiconductor's (TSM) strong earnings report and positive guidance. Perhaps investors are optimistic that other tech stocks will follow suit, as some prominent players report earnings next week, and many more the following week. Early indications suggest that AI will continue to be the buzzword in 2024 and the catalyst for the stock market!</p><p>As far as economic conditions go, the US economy is still healthy. Consumer sentiment is high, indicating that the consumer is extremely confident. Earlier in the week, we got a better-than-expected December retail sales report showing that consumers are still shopping. There was some concern that the higher interest rates ahead of the holidays would be a headwind for retailers, but it looks like things went better than forecasted.</p><p>There's a lot of euphoria surrounding the stock market, which spread to mid- and small-cap stocks toward the end of the trading week. It's a risk-on environment, with investors gravitating toward the Technology, Communication Services, and Consumer Discretionary sectors. Defensive sectors, such as Energy and Utilities, were this week's weakest-performing sectors.</p><h2>The Big Picture</h2><p>A glance at the <strong>StockCharts Dashboard</strong> gives you an overall view of the big picture. Equities led the rally, with all the equity indexes in the Market Overview panel in the green. The only red is the CBOE Volatility Index ($VIX), which shows that investors are extremely complacent.</p><p>The chart of the VIX displays an interesting pattern of choppiness in the last few weeks (see chart below). Earnings season is an exciting time in the stock market, and it isn't unusual to see some choppiness in volatility. When the VIX is low, it implies that investors aren't concerned about hedging their portfolios.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/19/90d99136-1efe-4325-97c1-1f0c88244ca7.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1. DAILY CHART OF CBOE VOLATILITY INDEX. The VIX is low, which indicates that investors aren't worried about the stock market. When the VIX starts climbing higher, it's time to become cautious, as it tends to spike quickly and without much warning.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>The VIX, considered the fear gauge, is key in identifying shifts in investor sentiment, so it doesn't hurt to regularly review this chart as you go through your stock market analysis. If you go back over ten years, you'll see the VIX tends to spike quickly, and the last thing you want is to get caught off guard.</p><p>The <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:sctr" target="_blank">StockCharts Technical Rank </a><span target="_blank">had a handful of stocks that increased by more than 14 points. Ally Financial (ALLY) and Super Micro Computer Inc. (SMCI) are the top two in the Top Up category for large-cap stocks. The chart of these two stocks (see below) shows the magnitude of their move on Friday.</span></p><p><img src="https://d.stockcharts.com/img/articles/2024/01/19/1e87202e-329a-4684-8638-54148126a69a.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2. TWO BIG SCTR MOVERS IN FRIDAY'S TRADING. Some stocks saw relatively large percentage up moves. Here, you see a financial and a tech stock seeing substantial gains.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>So, will the investor optimism continue into next week? There's not much economic data that will be released next week except for PCE, which is an important one. More important are earnings. In addition to these reports, keep an eye on the momentum and the VIX.</p><h2>End-of-Week Wrap-Up</h2><p><img src="https://d.stockcharts.com/img/articles/2024/01/19/7489bcec-8cd8-4d6b-8dfe-58acaa4e28e5.jpg" style="display: inline; margin: 0px 15px; float: right; width: 550px;" onclick="window.open('https://stockcharts.com/')"></p><p><strong>US equity indexes up; volatility down</strong></p><ul><li>S&P 500 up 1.23% at 4839.81, Dow Jones Industrial Average up 1.05% at 37863.80; Nasdaq Composite up 1.70% at 15310.97</li><li>$VIX down 5.87% at 13.30</li><li>Best performing sector for the week: Technology</li><li>Worst performing sector for the week: Utilities</li><li>Top 5 Large Cap <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:sctr" target="_blank">SCTR</a><span target="_blank"> stocks: Affirm Holdings (AFRM), Veritiv Holdings, LLC (VRT); Nutanix Inc. (NTNX); CrowdStrike Holdings (CRWD); Super Micro Computer, Inc. (SMCI).</span></li></ul><p><strong>On the Radar Next Week</strong></p><ul><li>Earnings week continues with the first of the Magnificent stocks, Tesla (TSLA) reporting on Wednesday. Other companies reporting include Netflix (NFLX), Intel (INTC), Lam Research (LRCX), KLA (KLAC), United Airlines (UAL), Abbott Laboratories (ABT).</li><li>December PCE Price Index</li></ul><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>Tech stocks are striking back after a rough start in the first week of the trading year. Back then, it might have been inconceivable to think that tech stocks would lead a bullish rally, but that narrative has changed quickly. Today's continuation of yesterday's strong rally boosted the broader equity indices, while the Dow Jones Industrial Average ($INDU) and S&P 500 ($SPX) closed at record highs, and the Nasdaq Composite ($COMPQ) clinched a new 52-week high.Chip stocks continued to gain momentum after yesterday's explosive rally, which followed Taiwan Semiconductor's (TSM) strong...Technology Stocks Rise, but Market Internals Look VulnerableJayanthi Gopalakrishnantag:stockcharts.com,2024-01-19:post-270712024-01-19T13:17:13Z2024-01-19T13:00:00Z<p><img src="https://d.stockcharts.com/img/articles/2024/01/18/d4ebdfa1-bb79-4fe3-a7e4-830fdb172be8.jpg" style="display: block; margin: 0px auto;"></p><p>When you get notification of the following two alerts, it's clear that today was technology's day. </p><ul><li>Technology Sector Bullish Percent Index crosses above 70 </li><li>Nasdaq crosses above 15000 </li></ul><hr><p><strong><em>Note: </em></strong><em>Here's how you can access </em><strong><em>predefined technical alerts. </em></strong></p><ul><li><em>Select the </em><strong><em>Charts & Tools</em></strong><em> tab</em></li><li><em>Locate the </em><strong><em>Predefined Technical Alerts</em></strong><em> card</em></li><li><em>Select </em><strong><em>View Latest Alerts</em></strong></li></ul><hr><p>An upgrade for Apple (AAPL) and a better-than-expected earnings report from Taiwan Semiconductor (TSM) boosted the Technology sector. The Nasdaq Composite ($COMPQ) ended the trading day up 1.35%. The index is trading above its 21-day <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages" target="_blank">exponential moving average</a> and is close to its 52-week high (see chart below). </p><p><img src="https://d.stockcharts.com/img/articles/2024/01/18/cecde1e5-74f0-4c81-99c2-6df6c1450d96.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1. NASDAQ COMPOSITE RISES AND APPROACHES ITS 52-WEEK HIGH. The Nasdaq showed signs of life with a big boost from semiconductor stocks. How much higher can it go?</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>When an index, stock, or exchange-traded fund (ETF) comes close to its yearly high, one of the biggest fears investors have is that it's getting toppy. It's a valid concern; after all, how many times have you purchased a stock only to see it drop?</p><h2>Looking Under the Hood</h2><p target="_blank">It helps to look at market breadth to determine what's happening beneath the surface. One popular breadth indicator is the <a href="https://school.stockcharts.com/doku.php?id=index_symbols:advance_decline_indi" target="_blank">Advance-Decline indicator</a><span target="_blank">. In the chart below, you can see the daily chart of the Nasdaq Composite, with the Nasdaq Advance-Decline Issues ($NAAD) indicator behind the price chart. </span></p><hr><p target="_blank"><strong target="_blank"><img src="https://d.stockcharts.com/img/articles/2024/01/19/5c85dc5a-3789-4f5a-a1c4-27178305ac29.jpg" style="display: inline; margin: 0px 15px; float: left;">StockCharts Tip:</strong><span target="_blank"> Add this indicator to your chart by selecting </span><strong target="_blank">Price</strong><span target="_blank"> from the Indicator dropdown menu and adding $NAAD in the </span><strong target="_blank">Parameters</strong><span target="_blank"> box. </span></p><hr><p><br></p><p><img src="https://d.stockcharts.com/img/articles/2024/01/18/d495ff69-176e-40ea-89bb-6fceee4023c4.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2. NASDAQ COMPOSITE RISES WHILE ADVANCE-DECLINE ISSUES MOVE LOWER. The divergence between the two could be a bearish signal, especially if the number of advancing issues continues to decline.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>A point to note is that there is a divergence between the index and the indicator—the Nasdaq Composite is rising while the Nasdaq Advance-Decline Issues is declining. This doesn't necessarily mean the index will see a massive decline soon; remember, the Technology Sector Bullish Percent Index just crossed above 70. It just means that indicators that suggest bearish sentiment need to reverse in a positive direction so you can be more confident about opening long positions.</p><p>StockCharts contains a massive collection of <a href="https://school.stockcharts.com/doku.php?id=market_indicators" target="_blank">Market Breadth indicators</a><span target="_blank">, such as the McClellan Oscillator, DecisionPoint Breadth and Volume Momentum Oscillator, Net New 52-Week Highs, and Percent Above Moving Average, among others.</span></p><p>In the weekly chart of $COMPQ below, the Nasdaq Percent of Stocks Above 200-Day Moving Average ($NAA200R) has been added in the lower panel. That shows that 44.76% of Nasdaq stocks are above their 200-day moving average. On a day when the Nasdaq closed 1.35% higher, it would have been more bullish if the percentage was higher.</p><hr><p><strong><img src="https://d.stockcharts.com/img/articles/2024/01/19/f1ef04e0-b77b-42df-bdbc-a66686d7746b.jpg" style="display: inline; margin: 0px 15px; float: left;">StockCharts Tip:</strong> Add this indicator to your chart by selecting <strong>Price</strong> from the Indicator dropdown menu and adding $NAA200R in the <strong>Parameters</strong> box. </p><hr><p><br></p><p><img src="https://d.stockcharts.com/img/articles/2024/01/18/2f40271d-5769-454c-a724-d5f270c05bb3.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3. WATCH MARKET BREADTH. The Percentage of Nasdaq stocks trading above their 200-day moving average started declining in February 2021, while the Nasdaq Composite continued making higher highs. It was only in early 2022 that the Nasdaq started declining. The difference this time is that the percentage of stocks trading above their 200-day moving average is lower.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p><img src="https://d.stockcharts.com/img/articles/2024/01/18/d6337a72-10d4-40a7-8894-8d140168fd1e.jpg" style="display: inline; margin: 0px 15px; float: right; width: 500px;" onclick="window.open('https://stockcharts.com/')"></p><p>What's more interesting on the weekly chart is that while the Nasdaq rose in 2021, the percentage of stocks trading above the 200-day moving average declined. This was an early indication that selling pressure may come into play, but it took almost a year before the Nasdaq started its downtrend. The difference is the percentage was at around 80% in early 2021.</p><h2>The Bottom Line</h2><p>If you're in a situation where the market looks toppy, and the overall sentiment is uncertain, it helps to look at the market's internals. Make sure to identify if there's more buying or selling pressure. If the buying pressure strengthens as the market ascends, there's a greater chance of continuation. If there's more selling pressure as the market increases, there's a greater chance of a pullback. Trading is all about probabilities, and you're looking for scenarios that have a higher probability of occurring.</p><p>So, if you're considering owning some technology stocks, it may be better to wait for the breadth indicators to turn upward and show some follow-through before hitting that buy button.</p><p><br></p><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>When you get notification of the following two alerts, it's clear that today was technology's day. Technology Sector Bullish Percent Index crosses above 70 Nasdaq crosses above 15000 Note: Here's how you can access predefined technical alerts. Select the Charts & Tools tabLocate the Predefined Technical Alerts cardSelect View Latest AlertsAn upgrade for Apple (AAPL) and a better-than-expected earnings report from Taiwan Semiconductor (TSM) boosted the Technology sector. The Nasdaq Composite ($COMPQ) ended the trading day up 1.35%. The index is trading above its...Stock Market Was Tentative This Week: S&P 500 Tested New High But Pulled BackJayanthi Gopalakrishnantag:stockcharts.com,2024-01-13:post-270372024-01-13T01:07:29Z2024-01-13T00:18:38Z<p><img src="https://d.stockcharts.com/img/articles/2024/01/12/e843e302-6e19-48ff-9f7c-f15cc6026275.jpg" style="display: block; margin: 0px auto;"></p><p>Earnings, Bitcoin ETFs, inflation data, geopolitical tensions—lots of activity at the tail end of the trading week. And the pesky S&P 500 ($SPX) stopped short of closing at a new high.</p><p>Earnings season kicked off this week with JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC), and Bank of America (BAC) reporting Q4 results. Overall, earnings were a mixed bag with some misses and some beats, but that was because of Q4 charges some of the banks faced. Beneath the surface, the earnings may not be as bad as they appear. However, there is concern about how banks will perform in a lower interest rate environment. C shares closed higher.</p><p>Delta Airlines (DAL) also announced earnings, and although its earnings came in better than expected, weak forward guidance brought the stock lower. The stock fell over 8% on Friday, and the effects of this report rippled through the airline industry.</p><p>Another notable event this week was the SEC's approval of spot Bitcoin exchange-traded funds (ETFs). These ETFs will give investors more access to the cryptocurrency. When the news broke out, Bitcoin rallied, hitting a high of $49,435, but pulled back since then, ending the week at around $43,600. Many traders expected a "buy the rumor, sell the news" scenario to play out, so the pullback in Bitcoin isn't surprising.</p><p>We also got inflation data this week. December CPI came in higher than expected, suggesting that inflation is still hot. But the PPI fell 0.1% and came in below expectations, which calmed investors, though they still seem hesitant. Wages are still rising, but energy and raw material costs are declining. The 10-year Treasury Yield ($TNX) pulled back after hitting resistance at its 200-day moving average (see chart below).</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/12/3f067e79-8dde-458a-bcee-d5a6f3d7bad5.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1. TREASURY YIELD PULLS BACK. The 10-year Treasury Yield moved higher, but pulled back after hitting resistance at its 200-day simple moving average.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>So far this year, there's been some up and down movement in the stock market, but if you look at a daily chart of the S&P 500 ($SPX), it has held on to the <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages:trading_support_resistance" target="_blank">support of its 21-day exponential moving average</a><span target="_blank"> (EMA) and is close to reaching its all-time high. During Friday's trading, the S&P 500 hit a high above 4800, but pulled back. It isn't unusual for an index like the S&P to test a key resistance level. If earnings come in strong next week, there's a chance the index could close at an all-time high.</span></p><p><img src="https://d.stockcharts.com/img/articles/2024/01/12/565c1a9b-f84a-4df8-a527-d51a5259f9dc.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2. S&P 500 HOLDS SUPPORT. Even though the S&P 500 didn't close at a new high, it's still holding support, and the NYSE advance-decline line is showing even sentiment between bulls and bears.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p target="_blank">The market internals are also holding steady. In the above chart, the NYSE Advance-Decline Line in the lower panel <span target="_blank">indicates that the number of advances vs. declines is pretty balanced. </span>The CBOE Volatility Index ($VIX) climbed higher the first week of the month, but the index has settled back to below 13. This indicates that investors are still calm.</p><p>Given the further escalation of geopolitical tensions in the Red Sea, it wouldn't be out of reach for investors to be hesitant to add positions ahead of the holiday weekend. Crude oil prices moved higher and broke above $75 per barrel on this news, but pulled back. Looking at the weekly chart of crude oil below, it's holding support at the 200-week simple moving average (SMA).</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/12/79dfebc4-6387-4ef9-8999-2e260e51967d.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3. CRUDE OIL HOLDS SUPPORT AT 200-WEEK MOVING AVERAGE. Crude oil prices rose on news of tensions in the Red Sea, but pulled back.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Shipping stocks also rose today on the news. Many shipping exchange-traded funds (ETFs) such as SonicShares Global Shipping (BOAT), US Global Sea To Sky Cargo (SEA), and Breakwave Tanker Shipping (BWET) gapped higher on Friday.</p><p>The S&P 500 is getting a little toppy, so it's not surprising that investors are extra cautious. If conditions are stable and the stock market moves higher next week, it may be time to keep your eyes peeled for any signs of market weakness. Even the stock market can't anticipate geopolitical tensions, so it's best to stay alert.</p><h2>End-of-Week Wrap-Up</h2><p><img src="https://d.stockcharts.com/img/articles/2024/01/12/74110ec9-5daf-4301-b56d-4a43e23c2a8f.jpg" style="display: inline; margin: 0px 15px; float: right; width: 400px;" onclick="window.open('https://stockcharts.com/')"></p><ul><li>$SPX up 0.08% at 4783.83, $INDU down 0.31% at 37592.98; $COMPQ up 0.02% at 14972.76</li><li>$VIX up 2.09% at 12.70</li><li>Best performing sector for the week: Technology</li><li>Worst performing sector for the week: Energy</li><li>Top 5 Large Cap <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:sctr" target="_blank">SCTR</a><span target="_blank"> stocks: Affirm Holdings (AFRM); USX-US Steel Group (X); Crowdstrike Holdings, Inc. (CRWD); Karuna Therapeutics, Inc. (KRTX); Vertiv Holdings (VRT).</span></li></ul><p><strong>On the Radar Next Week</strong></p><ul><li>Earnings week continues, with Goldman Sachs (GS), Morgan Stanley (MS), Charles Schwab (SCHW), Taiwan Semiconductor (TSM), and American Airlines (AAL) reporting.</li><li>December Housing Starts</li><li>December Existing Home Sales</li></ul><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>Earnings, Bitcoin ETFs, inflation data, geopolitical tensions—lots of activity at the tail end of the trading week. And the pesky S&P 500 ($SPX) stopped short of closing at a new high.Earnings season kicked off this week with JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC), and Bank of America (BAC) reporting Q4 results. Overall, earnings were a mixed bag with some misses and some beats, but that was because of Q4 charges some of the banks faced. Beneath the surface, the earnings may not be as bad as they appear. However, there is concern about how banks will perform in a...Hot Jobs Data Sends Stock Market Seesawing, Ending Nine-Week Winning StreakJayanthi Gopalakrishnantag:stockcharts.com,2024-01-05:post-269952024-01-05T23:49:47Z2024-01-05T23:21:57Z<p><img src="https://d.stockcharts.com/img/articles/2024/01/05/98471146-7ef9-4084-b913-285079d82623.jpg" style="display: block; margin: 0px auto;"></p><p>You can't blame the market for taking a breather after nine positive weeks.</p><p>The first trading week in January ended lower, which may have concerned investors. It's understandable how jittery investors are when you view the market's reaction to the December jobs report. The jobs data came in better than expected, which sent ripples through Wall Street. Right after the data was reported, equity futures fell, and Treasury yields ticked higher.</p><p>However, investors overcame the shock after digesting the info and looking more closely at the data. And the lower-than-expected ISM number, plus factoring in two major strikes and their impact on the jobs numbers, calmed investors for a short while. Equities turned higher, and Treasury yields dropped. The market continued to seesaw between gains and losses throughout the trading day.</p><p>Don't be surprised if the market exhibits similar behavior next week, as investors await December CPI data and the start of earnings season. This doesn't happen till the end of the week, so expect more of the same until Thursday. </p><p>According to the <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" target="_blank">CME FedWatch Tool</a><span target="_blank">, the probability of an interest rate cut in the March Fed meeting is at 64%, lower than before today's data was released. </span>2024 is a 50-50 year, with elections and the Fed's interest rate. Elections are going to take place in several countries around the world. And with over half the world's population heading to the polls this year, it's bound to bring some volatility to the stock market.</p><p>From a seasonal perspective for the US market, the first quarter of an election year tends to be volatile. There's a chance that stocks could sell off ahead of the elections, but generally trend higher after the elections. And while 2023 performed as expected, seasonally, it doesn't mean you should sit back and expect your portfolio to grow at the end of the year. Keep a watch on the broader market.</p><p>Given the S&P 500 index ($SPX) has been trending higher, trading above its 50-month simple moving average and showing a relatively steep uptrend since 2022 (see chart below), a correction shouldn't be worrisome until the index nosedives below critical support levels.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/05/8b9f9f03-b1c7-4d6b-8c34-724fe0ab1374.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1. MONTHLY CHART OF S&P 500. The index has been trending higher since 2012 and, except for a few instances, staying above its 50-month simple moving average. A break below the blue dashed uptrend line could be the first indication of a reversal.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>We have seen a rotation in leadership from Technology to Financials and Health Care, two sectors that struggled last year. The hope of lower interest rates likely boosted the Financials, which have seen a sharp upside rally since early November. The Health Care sector saw a similar move as Financials, though it pulled back a bit on Friday.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/05/af3bca23-021c-43b7-8a1a-e3eb881f19ba.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2. DAILY CHART OF FINANCIAL SELECT SECTOR SPDR ETF (XLF). After yields started falling, the Financials started recovering and rallied strongly.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>But that doesn't mean the Magnificent Seven will lose their status symbol. Although it closed off its high, Nvidia Corp. (NVDA) showed signs of recovering today. NVDA's stock still has a strong chart, maintaining support of its 50-day SMA. If the stock continues to rally in 2024, it could pull the rest of the market with it, especially the other six stocks that closely follow behind. So don't lose faith in the mega-cap tech stocks just yet.</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/05/f7201b2a-9d8e-4291-83cc-411f0f37085b.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3. NVIDIA STOCK IS STILL BULLISH. Don't give up on the Magnificent Seven stocks; they could still rally higher.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>It's not out of reach for Treasury yields to fall lower, as the Fed is expected to lower rates. Lower interest rates could see growth stocks pull back, but how much lower are interest rates likely to go?</p><p>As long as the economy keeps chugging along, the expectations the market has priced in will probably hold. But that doesn't mean interest rates will fall close to zero; more likely, they will pull back, and then probably settle at around the 3% level. A lot has to do with the balance between interest rates and economic growth.</p><p>On a closing note, small-cap stocks could show strength as rates fall. Keep an eye on a chart of the small caps vs. large caps in 2024, such as the one below of iShares Russell 2000 ETF vs. the SPDR S&P 500 ETF (IWM:SPY).</p><p><img src="https://d.stockcharts.com/img/articles/2024/01/05/6dd45272-815b-4fab-9e59-cadd187c2881.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 4. SMALL CAPS VS. LARGE CAPS. If the small caps start outperforming the large caps and trend higher, you may want to put more weight on small-cap stocks.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>If there's a clear rotation and investors gravitate toward small-cap stocks, it may be worth adding more weight to this asset class.</p><h2>End-of-Week Wrap-Up</h2><ul><li>$SPX up 0.18% at 4697.24, $INDU up 0.07% at 37,466.11; $COMPQ up 0.09% at 14524.07</li><li>$VIX down 5.52% at 13.35</li><li>Best performing sector for the week: Health Care</li><li>Worst performing sector for the week: Technology</li><li>Top 5 Large Cap <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:sctr" target="_blank">SCTR</a><span target="_blank"> stocks: Affirm Holdings (AFRM); USX-US Steel Group (X); Coinbase Global (COIN); PDD Holdings (PDD); Karuna Therapeutics (KRTX)</span></li></ul><p><strong>On the Radar Next Week</strong></p><ul><li>December CPI</li><li>December PPI</li><li>Earnings season kicks off with Bank of America (BAC), JP Morgan Chase (JPM), Wells Fargo (WFC), Citigroup (C), Delta Airlines (DAL), and more.</li></ul><hr><p><img src="https://d.stockcharts.com/img/articles/2024/01/05/7ee4b56c-153c-4a7c-baed-4faea33b7750.jpg" style="display: block; margin: 0px auto;" onclick="window.open('v')"></p><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>You can't blame the market for taking a breather after nine positive weeks.The first trading week in January ended lower, which may have concerned investors. It's understandable how jittery investors are when you view the market's reaction to the December jobs report. The jobs data came in better than expected, which sent ripples through Wall Street. Right after the data was reported, equity futures fell, and Treasury yields ticked higher.However, investors overcame the shock after digesting the info and looking more closely at the data. And the lower-than-expected ISM number, plus...Investing in 2024: 3 Promising Opportunities To WatchJayanthi Gopalakrishnantag:stockcharts.com,2023-12-29:post-269522023-12-29T21:27:30Z2023-12-29T21:27:30Z<p><img src="https://d.stockcharts.com/img/articles/2023/12/29/ca85bb52-dbf8-45cd-8ba3-21f8823799e3.jpg" style="display: block; margin: 0px auto;"></p><p>The last trading day of the year is behind us. It's time to relax, get ready to ring in the new year, reflect on stock market action, and set your investment goals for 2024.</p><p>2023 was a particularly difficult one for investors. In the early part of the year, investors feared a recession in light of high interest rates, inflation was a huge concern, and we went through a regional banking crisis. The way things were unfolding caused concern, especially with the Middle East conflict, but things changed in the last quarter, and the year ended on a positive note.</p><h2>Interest Rates</h2><p target="_blank">After reaching levels not seen since 2007, Treasury yields fell by around one percentage point. This helped the out-of-favor bond market, which finally showed signs of life. The weekly chart of the iShares 20+ Year Treasury Bond (TLT) below shows that bonds still have to move higher before confirming an uptrend. A break above its first resistance level at the 105.50 level, TLT's previous high, would be a more confirming signal. Yet, it's encouraging that the iShares 20+ Year Treasury Bond (TLT) is trading above its 50-week <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages" target="_blank">simple moving average</a><span target="_blank"> (SMA).</span></p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/dbba6f87-5520-43c0-b797-91f04d71c05d.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1. WEEKLY CHART OF TLT. Bond prices benefited from declining Treasury yields. Even though TLT is trading above its 50-week simple moving average, a break above 105.50 would confirm an uptrend. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>In the last Fed meeting, Chairman Jerome Powell indicated that rate cuts could occur before inflation hit the 2% target. That was enough to send investors flocking to equities, especially in the AI space. Investors are confident that a handful of mega-cap tech stocks would make great strides in AI technology. These stocks, known affectionately as the Magnificent Seven, were responsible for most stock market gains.</p><p>The stock market ended the year with a bang, with the Dow Jones Industrial Average ($INDU) rising 13.7% for the year, the S&P 500 ($SPX) up 24%, and the Nasdaq Composite up 43.6% (see daily chart below), the clear winner of the three broad indices.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/e1cde73e-7ad2-416a-ba0d-ff68ca7f9c53.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2. DAILY CHART OF NASDAQ COMPOSITE. AI euphoria resulted in a stellar rally in the Nasdaq Composite, making it the biggest gainer of the three broad indices. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Given all the positive data, the stock market is positioned to continue moving higher in 2024. The Santa Claus Rally is on track, and which would mean a year-end boost. Earnings and revenue expectations are high, and the market has priced in interest rate cuts. Yet there are other segments of the stock market that investors may be able to gain from in 2024.</p><h2>Trading the World</h2><p>Next year is a record year of elections, and over half of the world's population will be heading to the polls. This serves as a reminder that investors could benefit from international stocks. So far, emerging markets outside of China have picked up, as seen in the chart of iShares MSCI Emerging Markets ex China ETF (EMXC) below. After trending lower for most of 2022 and then trending sideways for most of 2023, emerging markets are starting to break out of a trading range. Their price action is similar to US small-cap stocks, another area you should watch in 2024.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/47ae5e8f-8a26-43a9-ac30-5bf4f4792c98.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3. DAILY CHART OF ISHARES MSCI EMERGING MARKETS EX CHINA ETF. Emerging markets have struggled in 2023, but they are breaking out of their trading range. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Three countries that have seen a strong 2023 are India, Japan, and Mexico. These three markets could continue moving higher, but if some other emerging markets start showing signs of catching up to these three, you could find some good values here.</p><p>If you will be investing outside of the US, closely follow the US dollar. Although the US dollar has weakened, it's still relatively high. A weakening dollar is an indication of loosening financial conditions, but it also benefits developing countries. The bigger question would be if the US dollar holds on to or falls below its 200-day SMA.</p><h2>Bitcoin</h2><p>Bitcoin prices fell drastically in 2022. After reaching a high of 69,355 in October 2021, it fell to a low of 14,925 in November 2022. Higher interest rates, the Sam Bankman-Fried incident, the collapse of FTX, and regulatory crackdowns hurt the cryptocurrency's price. Since then, Bitcoin has soared, reaching a 52-week high of 45,260. Some of that move may have to do with the possible regulatory approval of spot Bitcoin ETFs, which would open the door for a larger investment pool.</p><p>Based on the weekly chart of Bitcoin to US dollar ($BTCUSD) below, the cryptocurrency can rise further. After breaking above $30,000, there was no turning back until it hit its 52-week high of $45,260. The cryptocurrency is now stalling, forming a <a href="pennant formation" target="_blank">pennant formation</a>.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/7116ff4c-6bb8-494a-b045-d1be9ad415dc.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 4. WEEKLY CHART OF BITCOIN TO US DOLLAR. A break above the pennant formation could take $BTCUSD to its all-time high of $69,355.</span></p><p>A breakout above the pennant formation could see Bitcoin move 42.6% higher, the length of the flagpole. This would mean a rise to $61,275, close to its all-time high. If it continues higher, there's a chance Bitcoin hit a new all-time high. Of course, things could go in the other direction; Bitcoin could break below its pennant formation and go down to the $30,000 level or lower.</p><h2>The Bottom Line</h2><p><img src="https://d.stockcharts.com/img/articles/2023/12/29/23d9783c-055e-4032-ace4-47e1c9166708.jpg" style="display: inline; margin: 0px 15px; float: right; width: 250px;" onclick="window.open('https://stockcharts.com/special/')"></p><p>AI growth, emerging markets, and Bitcoin are three areas to watch in 2024. As 2023 winds up and before you ring in the new year, it may be a good idea to set your investment goals for 2024. <a href="https://support.stockcharts.com/doku.php?id=chartlists" target="_blank">Create ChartLists</a> of the different areas to watch, i.e., mega-cap tech, small caps, bonds, emerging markets, and Bitcoin, and be ready to sell assets that aren't performing well and add those that can sizzle your portfolio.</p><p>As small caps and emerging markets (besides China) break out of their trading range and interest rates fall, Financials and other small caps will probably do well in 2024, as will bonds and emerging markets. A lot depends on how worldwide elections play out. Geopolitical tensions could flare up, which could have an impact on supply chains and trade restrictions. This could introduce volatility in equities, which is why it's good to add an uncorrelated asset class such as Bitcoin or gold to your portfolio. It's always good to have a healthy balance of different asset groups.</p><p>If there's one word that encapsulates your investment strategy for 2024, it would be diversification. And last but not least, make it a point to go over <a href="https://stockcharts.com/articles/chartwatchers/2022/12/top-5-new-years-resolutions-ev-857.html" target="_blank">last year's trading resolutions</a><span target="_blank">.</span></p><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>The last trading day of the year is behind us. It's time to relax, get ready to ring in the new year, reflect on stock market action, and set your investment goals for 2024.2023 was a particularly difficult one for investors. In the early part of the year, investors feared a recession in light of high interest rates, inflation was a huge concern, and we went through a regional banking crisis. The way things were unfolding caused concern, especially with the Middle East conflict, but things changed in the last quarter, and the year ended on a positive note.Interest RatesAfter reaching...Stock Market Delivered Huge Gift, Wipes Away Recession FearsJayanthi Gopalakrishnantag:stockcharts.com,2023-12-22:post-269292023-12-22T21:23:17Z2023-12-22T21:23:17Z<p><img src="https://d.stockcharts.com/img/articles/2023/12/22/d03f3cc6-7afc-4148-88d1-fc8bd45dc133.jpg" style="display: block; margin: 0px auto;"></p><p>Last week's statements from Fed Chairman Jerome Powell suggested that interest rate cuts could come soon, which resulted in a sharp rally in the stock market. This was a different narrative from the comments Powell made earlier, in which he suggested it was too early to speculate interest rate cuts.</p><p>Revised GDP slowed in the third quarter to 4.9%, and jobless claims rose to 205K. The Personal Consumption Expenditures (PCE) Index for November fell 0.1%. There hasn't been a decline in this data point since April 2020. Year-over-year, PCE was up 2.6%, which is lower than economists expected. And core PCE was up 3.2% in November, which is lower than expectations but still higher than the 2% Fed target.</p><p>Other data shows that personal income and consumer spending rose, further reinforcing the economy's health. All these data points are positive for the stock market and could move the broader stock market indices higher. If the trend continues, we could see a Santa Claus rally this year.</p><h2>A Healthy Pullback</h2><p>Stock market price action on Wednesday made investors jittery, and recession worries resurfaced. But pullbacks can be healthy. If you look at the daily chart of the Dow Jones Industrial Average ($INDU) below, you can see that the <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:relative_strength_index_rsi" target="_blank">relative strength index</a> (RSI) was overbought. Thus, a short-term pullback close to the previous high of just below 37,000 is healthy and an indication the index will resume its longer-term uptrend. So far, even though the Dow Jones Industrial Averaged closed slightly lower, the uptrend is still intact.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/22/ade4db62-7f27-4b08-8900-f108a46abf9f.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1: DAILY CHART OF DOW JONES INDUSTRIAL AVERAGE ($INDU). The index is still maintaining its uptrend despite the selloff on Wednesday. The previous high, slightly below 37,000, is the first support level to watch. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>That the RSI dropped closer to 70 suggests momentum faded after the Dow's nine-day winning streak. Since the Dow's recent ascent was pretty steep, it's a good idea to add a short-term moving average as a support level. In the chart below, a 15-day <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages" target="_blank">exponential moving average</a> (EMA) was overlaid on the chart of the Dow Jones Industrial Average. The 15-day EMA isn't too far off from the 37,000 level.</p><h2>Small Caps Rising</h2><p>Another area of focus is the price action of small-cap stocks. The January effect is <a href="https://stockcharts.com/articles/chartwatchers/2023/12/stock-market-starts-december-o-174.html" target="_blank">all about small-cap stocks</a><span target="_blank"> and we've seen this group of stocks rise from mid-December. Smaller companies benefit from a lower interest rate environment, since borrowing costs are lower. The daily chart of the S&P 600 Small Cap Index ($SML) below shows that small caps are trading at their yearly highs. If economic conditions sustain their current trend, 2024 should be a good year for small-cap stocks.</span></p><p><img src="https://d.stockcharts.com/img/articles/2023/12/22/7ebd57a8-df01-411d-afdf-39aeeb277a09.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2: DAILY ONE-YEAR CHART OF S&P 600 SMALL CAP INDEX ($SML). Small caps have been shining since November, mainly because of lower interest rates. Small-cap stocks tend to perform better in January. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><h2>The Bond Market</h2><p>Bond and stock prices are generally negatively correlated. Bond prices have risen since mid-October (see weekly chart below of iShares 20+ Year Treasury Bond ETF), which shows that Fed monetary decisions are affecting the financial markets. A higher interest rate environment made equity investors reluctant to buy stocks. But now that Treasury rates show signs of reversing, conditions are stabilizing. </p><p><img src="https://d.stockcharts.com/img/articles/2023/12/22/b7355f4e-d248-4f70-b027-0347ea0ba293.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3: BOND PRICES ARE RISING. After struggling for several years, bonds may be starting to show their value. But it's too early to tell if the uptrend will be long-term. Look for a break above the 105 level. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Treasury yields and bond prices move inversely, so with Treasury yields dropping, it's no surprise that bond prices are rising. However, bond prices still have to go much higher before trending higher. A break above the 105 level would be positive for TLT and an indication to allocate a slightly larger portion of your portfolio to bonds. </p><p>Now that inflation is cooling, the US dollar is moving lower (see chart below). The monthly chart shows that even though the US dollar is falling, it's still high. If it continues lower and hits the July 2023 low, it could be an additional catalyst to send stocks and bonds rallying higher.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/22/ba823971-6841-4df9-a2eb-cb7249b49116.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 4: THE US DOLLAR IS FALLING BUT STILL HIGH, RELATIVELY SPEAKING. If inflation continues to cool, the US dollar could fall further, which could be bullish for stocks and bonds. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><h2>Stock Market Volatility</h2><p>With inflation abating, investors have become more complacent, as indicated by the CBOE Volatility Index ($VIX) trading around 13. A low VIX suggests that investors aren't fearful and are willing to invest in riskier assets. There's not much concern about portfolio hedging.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/22/dbcd1c30-fd0e-47cb-a1cf-5c270239951f.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 5: LOW VOLATILITY MEANS INVESTORS ARE COMPLACENT. Although the CBOE Volatility Index shows that investors aren't worried about hedging their portfolios, investors should watch this index as it can indicate a shift in investor sentiment. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>But that can change, so investors need to keep an eye on the VIX. It tends to spike, and any signs of it moving out of its comfort zone should be a signal that perhaps things aren't going to be optimistic for too long. It may not happen for a while, but it's something to watch.</p><p>The stock market went through interesting ebbs and flows this year. There's no telling what 2024 will be like, but you can stay on top of the stock market action using the tools available at StockCharts.com.</p><p>Happy holidays from the StockCharts team.</p><hr><p><img src="https://d.stockcharts.com/img/articles/2023/12/22/0cab0dff-7e70-4940-ad46-8ca2d77554f2.jpg" style="display: block; margin: 0px auto; width: 75%;" onclick="window.open('https://stockcharts.com/special/')"></p><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation or without consulting a financial professional.</em></p>Last week's statements from Fed Chairman Jerome Powell suggested that interest rate cuts could come soon, which resulted in a sharp rally in the stock market. This was a different narrative from the comments Powell made earlier, in which he suggested it was too early to speculate interest rate cuts.Revised GDP slowed in the third quarter to 4.9%, and jobless claims rose to 205K. The Personal Consumption Expenditures (PCE) Index for November fell 0.1%. There hasn't been a decline in this data point since April 2020. Year-over-year, PCE was up 2.6%, which is lower than economists expected...Cryptocurrency Prices in the Spotlight, Small Caps Now in an UptrendJayanthi Gopalakrishnantag:stockcharts.com,2023-12-05:post-268262023-12-05T00:09:21Z2023-12-05T00:09:21Z<p><img src="https://d.stockcharts.com/img/articles/2023/12/04/d545a967-02fb-4feb-8f55-9ae1b5b496d3.jpg" style="display: block; margin: 0px auto;"></p><p>The stock market seems to be pulling back after last week's strong rally. It's a healthy sign, given the incredible performance in November. Jeff Hirsch, editor of the <a href="https://store.stockcharts.com/products/stock-traders-almanac-2024" target="_blank"><em>Stock Trader's Almanac</em></a><em target="_blank">,</em><strong target="_blank"><em> </em></strong><span target="_blank">said that </span><a href="https://stockcharts.com/articles/chartwatchers/2023/12/stock-market-starts-december-o-174.html" target="_blank">price action in early December tends to be flat</a><span target="_blank">.</span></p><p>This week, we'll get the November nonfarm payrolls and the JOLTs report. The labor market is still strong, and we're likely to see that when the data is reported. The market is expecting 175,000 new jobs, which is a strong number. And unemployment is expected to remain at 3.9%. If the data is much stronger than expected, will there be a selloff?</p><p>We need to see signs of inflation cooling before the Fed starts cutting interest rates. Although the Fed says they want inflation to be at 2%, we're far from that level. But the stock market has priced in four interest rate cuts in 2024, which is the main reason behind November's stellar rally.</p><h2>The Bitcoin Rally</h2><p>Bitcoin has benefited from the narrative. The cryptocurrency hit a 52-week high, closing above 42,000 (see the daily chart of Bitcoin to US dollar below).</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/04/ae9fe404-fd1e-495e-8b46-7bfc8bdc0432.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1: DAILY CHART OF BITCOIN TO US DOLLAR. $BTCUSD broke out from its July highs in late October. Since then it's been going higher and higher.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>In late October, $BTCUSD broke above its July highs, which was considered an important resistance level. Since breaking above this level, the cryptocurrency has soared. Where to next for Bitcoin? Looking at the weekly chart below, the next level to break above would be the March 2022 high.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/04/a466774c-fda3-4f2a-bd88-8195aa237172.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2: WEEKLY CHART OF BITCOIN. When the MACD line crosses over the signal line close to the zero line, it's often a very bullish indication. Look at what happened in October 2020. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em>The MACD line has crossed above its signal line, and it happened close to the zero line, which is considered a bullish indication. Look at what happened when a similar situation occurred in October 2020.</p><p>On the daily chart, the MACD crossover of the signal line indicates further upside potential, but not as much as the weekly chart suggests. Since $BTCUSD is a volatile asset, you want to watch the daily chart for entry decisions, and perhaps an even smaller time frame to make your exit decisions.</p><p>Gold prices also displayed interesting price action. The shiny metal hit a record high of $2152 per ounce but then retreated sharply, which was interesting given there hasn't been a drastic reversal in interest rate trends. But realistically, it makes sense. When gold hits a high, why not take profits and earn some interest on the cash? So, it may be a short-term move. It's worth watching gold, since investors use it to diversify their portfolio holdings and as a hedge.</p><p>The SPDR Gold Shares ETF (GLD) is popular among retail investors. It follows gold prices relatively well (see chart below).</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/04/50e986ae-99c4-4133-aa3c-ee8828b63229.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3: GOLD HITS A NEW HIGH, BUT SELLS OFF. Investors sold off their gold assets in a rush after price hit an all-time high.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><h2>Don't Forget the Small Caps</h2><p>One asset class that closed higher today is small caps. This group is showing strength after getting trampled. The market internals continue to support the trend higher, which is encouraging, especially after Hirsch reiterated that small-caps tend to perform well starting in mid-December. Are they getting a head start on the rally, or can we expect a big rally in the middle of the month? It's something to watch.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/04/ffd6e1cd-2e92-49cd-8e70-984bb611e299.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 4: SMALL CAP STOCKS GAIN STRENGTH. After being trampled, small-cap stocks are starting to rally and trend higher.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><h2>The Bottom Line</h2><p>Early December should be an interesting time in the stock market. Keep an eye on the typical seasonal patterns at this time of the year, especially in a pre-election market. How December and early January play out will indicate how the market will perform in 2024.</p><hr><p><img src="https://d.stockcharts.com/img/articles/2023/12/04/4cb3394d-7a1d-46b4-bd30-1104ab7bd99d.jpg" style="display: block; margin: 0px auto;" onclick="window.open('https://store.stockcharts.com/products/stock-traders-almanac-2024')"></p><hr><p><strong><em>Disclaimer: </em></strong><em>This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>The stock market seems to be pulling back after last week's strong rally. It's a healthy sign, given the incredible performance in November. Jeff Hirsch, editor of the Stock Trader's Almanac, said that price action in early December tends to be flat.This week, we'll get the November nonfarm payrolls and the JOLTs report. The labor market is still strong, and we're likely to see that when the data is reported. The market is expecting 175,000 new jobs, which is a strong number. And unemployment is expected to remain at 3.9%. If the data is much stronger than expected, will there be a...Stock Market Starts December On A Strong Note: What This Means For the Rest of the YearJayanthi Gopalakrishnantag:stockcharts.com,2023-12-02:post-268142023-12-02T19:13:10Z2023-12-02T19:13:10Z<p><img src="https://d.stockcharts.com/img/articles/2023/12/01/79b3ad21-9bb1-44d2-a23b-7f74214b20ed.jpg" style="display: block; margin: 0px auto;"></p><p>The stock market is off to a great start on the first trading day of December. The S&P 500 ($SPX) closed at its 2023 high, the Dow Jones Industrial Average ($INDU) hit a new 52-week high, and the Nasdaq Composite ($COMPQ) also closed higher. Small caps led the rally, with the S&P 600 Small Cap Index ($SML) up 2.89%. It's worth noting that small caps are displaying strengthening market internals. The <a href="https://school.stockcharts.com/doku.php?id=market_indicators:percent_above_ma" target="_blank">percentage of S&P 600 stocks above their 200-day moving average</a> is over 50%, and the <a href="https://school.stockcharts.com/doku.php?id=market_indicators:ad_line" target="_blank">Advance-Decline Line</a> is in positive territory.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/01/e3680a2b-e4e9-4050-96b5-dca5352e6877.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1: SMALL-CAP STOCKS TAKE OFF. It's typical for small-cap stocks to rally in December. Keep an eye on how this asset group plays out; it could indicate the market's performance in 2024.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>November was a terrific month in the stock market, with the broader indexes eking out solid gains. The S&P 500 was up almost 9% for the month, and the Nasdaq Composite closed out November with a 10.7% gain.</p><p>Most of the rally in the stock market may have been because the stock market is betting that the Fed will start to cut interest rates. Comments from Fed Chairman Powell on Friday were similar to what he's said in the past, which put investors more at ease.</p><h2>Stock Market Seasonality</h2><p>This type of market behavior isn't unusual in the stock market at this time of the year. In a recent episode of <a href="https://www.youtube.com/watch?v=gGph90PewNU&t=1974s" target="_blank"><em>The Final Bar</em></a><em target="_blank">, </em><span target="_blank">our chief market strategist, David Keller, CMT, spoke with Jeff Hirsch, Editor of the </span><a href="https://store.stockcharts.com/products/stock-traders-almanac-2024" target="_blank"><em>Stock Trader's Almanac</em></a><span target="_blank">, about the seasonal patterns that are typical at the end of the year and in the first few months of an election year. So far, the market is in sync with what the Almanac anticipates. If this continues to be the case, then it's likely that 2024 will be a bullish stock market year.</span></p><p>When analyzing the stock market, the only certainty is that nothing works the way you expect. So, as a trader or investor, you should be aware that, if things aren't falling into place like they should, it's an early indication that something is likely to go wrong.</p><p>Early December tends to be flat, mostly because of tax loss selling. The selling can make some investors nervous, especially after a robust November. But December is an important month, since it kicks off some seasonal patterns such as the January Effect and Santa Claus Rally.</p><h2>The January Effect</h2><p>The January Effect, which starts in mid-December, is about small-cap stocks, which didn't participate in the bull rally that large-cap stocks experienced. But they are showing signs of taking off. The chart below shows the ratio of the iShares Russell 2000 ETF (IWM) to the iShares Russell 1000 ETF (IWB). The rise above the 50-day simple moving average indicates that small caps, represented by IWM, are gaining strength. It's worth watching the small caps as mid-December approaches.</p><p><img src="https://d.stockcharts.com/img/articles/2023/12/01/787a1647-db32-40f1-b3d1-e118fe1042bf.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2: SMALL CAPS VS. LARGE CAPS. When analyzing the ratio of small caps to large caps, it looks like small caps are starting to show signs of strength.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><h2>The Santa Claus Rally</h2><p>The Santa Claus Rally, which takes place on the last five trading days of December and the first two trading days in January, is also critical. If this short rally fails to show up, you should tread with caution in 2024. That doesn't mean you should sell your stocks. Instead, you may want to rebalance your portfolio so it's in line with how the market is playing out. For example, if defensive sectors are outperforming other sectors, you may want to allocate more of your portfolio to defensive stocks like Consumer Staples, instead of offensive ones. And depending on how commodities are performing, you may want to allocate more weight to energy or gold stocks.</p><h2>The January Barometer</h2><p>Next year is an election year, so the first half of the year will be important. How the year plays out rests on how January performs. The <em>Stock Trader's Almanac</em> covers various seasonal patterns you can expect in the early months of an election year. In addition, watch fundamentals, especially interest rates. Whether the Fed cuts rates or not will have an impact on the stock market.</p><h2>The Bottom Line</h2><p>So, as we approach the last month of the year, watch the small caps, note how the market performs during the last five trading days and first two of 2024, and observe how January plays out. If everything plays out as expected, we'll have a bullish 2024.</p><h2>End-of-Week Wrap-Up</h2><p><strong>US equity indexes up; volatility down</strong></p><p><img src="https://d.stockcharts.com/img/articles/2023/12/01/8d421764-9fa0-400c-ad31-d7cf0639d830.jpg" style="display: inline; margin: 0px 15px; float: right; width: 600px;" onclick="window.open('https://store.stockcharts.com/products/stock-traders-almanac-2024')"></p><ul><li>$SPX up 0.59% at 4594.63, $INDU up 0.82% at 36245.50; $COMPQ up 0.55% at 14305.03</li><li>$VIX down 2.24% at 12.63</li><li>Best performing sector for the week: Real Estate</li><li>Worst performing sector for the week: Communication Services</li><li>Top 5 Large Cap <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:sctr" target="_blank">SCTR</a><span target="_blank"> stocks: Coinbase Global, Inc. (COIN); PDD Holdings, Inc. (PDD); Vertiv Holdings, LLC (VRT); New Oriental Education & Technology Group, Inc. (EDU); Crowdstrike Holdings, Inc. (CRWD)</span></li></ul><p><strong>On the Radar Next Week</strong></p><ul><li>October Factory Orders</li><li>October ISM Services PMI</li><li>October JOLTs Job Openings</li><li>November Non-Farm Payrolls</li><li>November Unemployment Rate</li></ul><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>The stock market is off to a great start on the first trading day of December. The S&P 500 ($SPX) closed at its 2023 high, the Dow Jones Industrial Average ($INDU) hit a new 52-week high, and the Nasdaq Composite ($COMPQ) also closed higher. Small caps led the rally, with the S&P 600 Small Cap Index ($SML) up 2.89%. It's worth noting that small caps are displaying strengthening market internals. The percentage of S&P 600 stocks above their 200-day moving average is over 50%, and the Advance-Decline Line is in positive territory.CHART 1: SMALL-CAP STOCKS TAKE OFF. It's typical...The Stock Market In 3 Charts: Market Breadth, Bonds, SentimentJayanthi Gopalakrishnantag:stockcharts.com,2023-11-22:post-267712023-11-22T23:11:04Z2023-11-22T23:11:04Z<p><img src="https://d.stockcharts.com/img/articles/2023/11/22/8f22f465-cfae-4379-bcbe-26c91e19c820.jpg" style="display: inline; margin: 0px 15px; float: left; width: 600px;"></p><p>Stocks are having a good November, which aligns with typical stock market behavior. According to the <em>Stock Trader's Almanac 2023</em>, both the Wednesday before Thanksgiving and the Friday after have a good track record. So, even though the stock market wraps up at 1 PM on Friday, it may be worth checking your portfolio value. Trading may be thin, since most traders would have taken the day off.</p><p>The Dow Jones Industrial Average ($INDU), S&P 500 ($SPX), and Nasdaq Composite ($COMPQ) all closed higher. All three of the indexes are trading close to their all-time highs. Even small- and mid-cap stocks are showing signs of strength. The S&P 600 Small-Cap Index ($SML) and the S&P 400 Mid-Cap Index ($MID) are trading above their yearly lows, but they have much catching up to do before hitting their all-time highs. All S&P sectors except Energy were in the green after Wednesday's close. There was supposed to be an OPEC meeting today to discuss oil production cuts, but it didn't happen.</p><h2>Overall Market Breadth</h2><p>On the equities front, it's encouraging to see market breadth strengthening (see chart below). The NYSE Common Stock Only Advance-Decline line is trending higher, the percentage of stocks trading above their 200-day moving average is at 56.4%, and the S&P 500 Bullish Percent Index at 62.4, above the 50% threshold level. Overall, the S&P 500 and other broader indexes are bullish.</p><p><img src="https://d.stockcharts.com/img/articles/2023/11/22/1dd84651-7b50-4cf6-ba7f-b29ba1202d91.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1: S&P 500 MARKET BREADTH STRENGTHENS. As the S&P 500 approaches its all-time high, it's encouraging to see market breadth widening. Advancers are greater than decliners, the percentage of S&P 500 stocks trading above their 200-day moving average is rising, and the S&P 500 Bullish Percent Index also indicates that investors are bullish.</span><em><span class="image-caption">Chart source: StockChart.com. For educational purposes.</span></em></p><p>Economic data has been mixed. Jobless claims didn't show much weakness and durable goods missed the downside. Earlier in the week, the Fed minutes indicated that the "monetary policy will remain restrictive" narrative is still in play. There was no hint of cutting rates in the near future.</p><p>The economic news didn't impact the stock market too much. The November rally is still going strong, with the Nasdaq rallying almost 11%, the Dow up 6.6%, and the S&P 500 up 8.45%.</p><h2>The Bond Market</h2><p>The 10-year US Treasury Yield Index ($TNX) fell to its 100-day <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages" target="_blank">simple moving average</a><span target="_blank"> (SMA), which is acting as a support level. The yield bounced off the SMA and closed at 4.42% (see chart below). Lower yields tend to be good for stocks.</span></p><p><img src="https://d.stockcharts.com/img/articles/2023/11/22/23d5f185-47b1-4191-bd89-43dce191297e.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2: 10-YEAR US TREASURY YIELD INDEX. The 100-day simple moving average could be a support level to watch.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Treasury yields move inversely to bond prices, so it's not surprising to see that the iShares 20+ Year Treasury Bond ETF (TLT) has been moving higher. If you've pulled out all your fixed-income investments, now may be time to start thinking about getting back in. But there's no need to rush, since TLT is still a long way for TLT to reach its yearly highs of around $106.</p><h2>Investor Complacency</h2><p>Overall, investor uncertainty has eased considerably since October. The CBOE Volatility Index ($VIX) is very close to its 52-week low, and the MOVE Index, a measure of volatility in the bond market, is also trending lower (see chart below). The VIX closed at 12.85.</p><p><img src="https://d.stockcharts.com/img/articles/2023/11/22/ce6ca0a4-67e9-401f-bf5c-6765240c8fbf.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3: STOCK AND BOND VOLATILITY. The VIX (red line) and MOVE (blue line) are moving in the same direction, indicating that stock and bond investors are complacent.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Investor complacency could make investors more optimistic and be inclined to take advantage of Black Friday deals.</p><p>Black Friday shopping has already started, and retail stocks are showing mixed results. Shares of Amazon (AMZN) are trading close to its 52-week high. It's a similar scenario with Gap, Inc. (GPS) and Ross Stores (ROST). Target (TGT) saw its share price gap up on its recent earnings report. Things weren't the same for Walmart (WMT), with the stock price falling after its recent earnings report. WMT's earnings were strong, but the recent slowdown in consumer spending didn't sit well with investors. But that doesn't mean you should sell the stock. If you look at a weekly chart of WMT, the uptrend in the stock price is still intact.</p><h2>In Other News</h2><p>Earnings season may be coming to a close, but NVIDIA was the big one this week, closing lower today in spite of crushing Q3 earnings. Possible restrictions in China's chip exports may have had something to do with the selloff, although some profit-taking ahead of the Thanksgiving holiday shouldn't be alarming. NVDA is still a healthy company with a strong SCTR score and healthy relative strength with respect to the S&P 500.</p><h2>A Thanksgiving Hope</h2><p>Even though the stock market's November rally is going strong ahead of the Thanksgiving holiday, there's still a lot of turmoil in this world. Let's hope for steps toward peaceful resolutions.</p><p><img src="https://d.stockcharts.com/img/articles/2023/11/22/1870fd5f-f6e4-4e9c-a1e7-fce208795aab.jpg" style="display: block; margin: 0px auto;" onclick="window.open('https://stockcharts.com/special/')"></p><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>Stocks are having a good November, which aligns with typical stock market behavior. According to the Stock Trader's Almanac 2023, both the Wednesday before Thanksgiving and the Friday after have a good track record. So, even though the stock market wraps up at 1 PM on Friday, it may be worth checking your portfolio value. Trading may be thin, since most traders would have taken the day off.The Dow Jones Industrial Average ($INDU), S&P 500 ($SPX), and Nasdaq Composite ($COMPQ) all closed higher. All three of the indexes are trading close to their all-time highs. Even small- and...The Bull Has Left the Bear in the Dust: It's Time To Add Small Caps To Your PortfolioJayanthi Gopalakrishnantag:stockcharts.com,2023-11-17:post-267452023-11-17T21:39:57Z2023-11-17T21:39:57Z<p><img src="https://d.stockcharts.com/img/articles/2023/11/17/3a46f589-7b5a-4ee8-8400-b4eec6f925b7.jpg" style="display: block; margin: 0px auto;"></p><p>The Fed is done raising interest rates. At least, that's what the stock market has priced in, based on recent inflation data. We've also seen an uptrend in weekly jobless claims and signs that suggest that consumer spending may be slowing down.</p><p>A slowdown, or soft landing, is something most investors would prefer to see—stability vs. uncertainty. And it looks like the US economy is heading in that direction. Although consumer spending may slow down, household wealth is still healthy, preventing the economy from heading into a recession. The stock market is on track for a third positive weekly win streak.</p><p>Investor enthusiasm spiked when the CPI data came in unchanged. The softer PPI helped eke out more of a rally in the broader indexes, although at a much more muted level. Overall, the week ended on a positive note.</p><p>While the highlight of the recent rally saw the S&P 500 and Nasdaq Composite stocks draw a lot of attention, the Dow Jones Industrial Average wasn't too shabby. On a monthly basis, the Dow, like the S&P 500 and Nasdaq Composite, is trading above its 50-month <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages" target="_blank">moving average</a>.</p><p><img src="https://d.stockcharts.com/img/articles/2023/11/17/7543a5d2-00b7-4654-84f6-32eab99b2df8.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1: MONTHLY CHART OF DOW JONES INDUSTRIAL AVERAGE. The index is trading above its 50-month moving average (red line). So far, November has been a strong month for the index. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>On a weekly scale, the Dow, with the exception of the 2022 dip, has been trending within a slightly upward-sloping price channel. A break above the channel would pave the way for a Dow Jones Industrial Average all-time high. Note that the 50-week simple moving average (SMA) has crossed above the 100-week SMA. </p><p><img src="https://d.stockcharts.com/img/articles/2023/11/17/65623e25-a8de-4f7d-93db-d03514010416.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2: WEEKLY CHART OF DOW JONES INDUSTRIAL AVERAGE. A break above the upward-sloping channel would be very positive for the index. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes. </span></em></p><p>The daily chart of the Dow Jones Industrial Average shows the index trading above its 100-day SMA (see below). This moving average could be a support level on the downside. Looking at the chart of the Dow Jones Industrial Average today, you won't see much resistance between now and the Dow's all-time high.</p><p><img src="https://d.stockcharts.com/img/articles/2023/11/17/7b0a70c8-6f48-4d18-840e-54204a4c8a78.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3: DAILY CHART OF DOW JONES INDUSTRIAL AVERAGE. It's a clear path to the index's all-time high. If the bullish sentiment remains strong, we could see the broader index reach new highs in 2023. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes. </span></em></p><h2>Are Small Cap Stocks Catching Up to the Large Caps?</h2><p>Another area to focus on as the year comes to an end is small-cap stocks. This asset group has struggled to catch up with the large-cap stocks, but small-caps could be making a comeback. </p><p><img src="https://d.stockcharts.com/img/articles/2023/11/17/18bccbf8-af31-4a4e-8255-8f9612bdcbe4.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 4: S&P 600 SMALL CAP INDEX. Small caps are showing signs of life in their value and breadth. The percentage of S&P 600 stocks above their 50-day moving average is at 65.7%, Advance-Decline percent is at 62%, and Volume Advance-Decline Percent is at 51.5%. These are all indications of improving market breadth. </span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p target="_blank">In a recent episode of <a href="https://www.youtube.com/watch?v=xj3HWGHQv9c" target="_blank"><em>The Final Bar</em></a><span target="_blank">, our chief market strategist, David Keller, CMT, spoke with Craig Johnson, CFA, CMT, who made an interesting case for small-cap performance for the last few months of 2023. Be sure to check out the episode.</span></p><p>Small caps could also be less influenced by news that sends large-cap stocks into big swings. Look at how a large-cap stock such as Microsoft (MSFT) fell after Sam Altman, CEO of OpenAI, exited the company. </p><p>In addition to small caps, the <strong>Invesco S&P Equal Weighted Index ETF</strong> (RSP) is showing signs of trending higher, as are Materials and Industrials. If these areas show signs of a clear uptrend, we can kiss the bear goodbye. And with the bear out of the way, there will be one less thing to worry about as we approach the holiday season.</p><h2>Retail Sector Sending Mixed Messages</h2><p>As the holiday shopping season starts, investors may want to focus on retail shares. Shares of clothing retailer <strong>Gap, Inc. </strong>(GPS) gapped higher after reporting better-than-expected earnings. This news helped other retailers, such as <strong>Ross Stores </strong>(ROST), the largest percentage gainer in the S&P 500.</p><p>Earlier this week, <strong>Target</strong> (TGT) announced strong earnings, which sent its stock price higher. This was refreshing, especially after the stock's steep downfall. <strong>Walmart</strong> (WMT), however, was a different story. Even though its earnings were strong, the retailer mentioned that consumer spending is slowing down, which could impact its bottom line next quarter. WMT stock price gapped significantly lower after its earnings report and is now trading close to its October low.</p><p>A slowdown in spending doesn't mean consumers will stop spending. The economy is still healthy, and overall, we may be in for a bull rally from now to the end of the year.</p><h2>End-of-Week Wrap-Up</h2><p><img src="https://d.stockcharts.com/img/articles/2023/11/17/d7047f0e-0555-4faa-9269-d46f7d2044c9.jpg" style="display: inline; margin: 0px 15px; float: right; width: 600px;" onclick="window.open('https://stockcharts.com/special/')"></p><p><strong>US equity indexes up; volatility down</strong></p><ul><li>$SPX up 0.13% at 4514, $INDU up 0.01% at 34947; $COMPQ up 0.08% at 14125</li><li>$VIX down 3.63% at 13.80</li><li>Best performing sector for the week: Real Estate</li><li>Worst performing sector for the week: Consumer Staples</li><li>Top 5 Large Cap <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:sctr" target="_blank">SCTR</a><span target="_blank"> stocks: Vertiv Holdings, LLC (VRT); Palantir Technologies, Inc. (PLTR); DraftKings, Inc. (DKNG), PDD Holdings (PDD); New Oriental Education & Technology Group, Inc. (EDU)</span></li></ul><p><strong>On the Radar Next Week</strong></p><ul><li>NVIDA earnings</li><li>October existing home sales</li><li>October durable goods orders</li><li>November PMI</li></ul><hr><p><strong><em>Disclaimer:</em></strong><em> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>The Fed is done raising interest rates. At least, that's what the stock market has priced in, based on recent inflation data. We've also seen an uptrend in weekly jobless claims and signs that suggest that consumer spending may be slowing down.A slowdown, or soft landing, is something most investors would prefer to see—stability vs. uncertainty. And it looks like the US economy is heading in that direction. Although consumer spending may slow down, household wealth is still healthy, preventing the economy from heading into a recession. The stock market is on track for a third positive...A Supercharged Stock Market Rally: Catch These Stocks Before They Get AwayJayanthi Gopalakrishnantag:stockcharts.com,2023-11-14:post-267252023-11-14T22:59:30Z2023-11-14T22:53:47Z<p><img src="https://d.stockcharts.com/img/articles/2023/11/14/476a589c-a53b-4726-9e6d-b53b9ceaabb9.jpg" style="display: block; margin: 0px auto;"></p><p>October's unchanged headline US CPI and lower-than-expected core CPI were reasons for investors to celebrate. The broader stock market indexes moved higher on the news, and the Fed may start to lower interest rates sooner than expected. All 11 S&P sectors are up, and small caps are seeing a massive rise—up over 5%. This is welcome news, as this group struggled to reach the highs large caps reached. Perhaps it's catch-up time for stocks that have been severely beaten down.</p><p><img src="https://d.stockcharts.com/img/articles/2023/11/14/3abad0a1-e244-4020-a488-b06928773214.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 1: THE STOCK MARKET ON TURBOCHARGE. Large caps, tech stocks, small caps, and mid caps all rallied today.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><h2>The Bond Market</h2><p>Treasury yields are lower, with the 10-year yield trading well below its 4.5% threshold. Bond prices are seeing signs of life, with the iShares 20+ Year Treasury Bond ETF (TLT) up 2%. TLT is trading close to 90. Meanwhile, the US dollar broke lower, which generally means investors are risk-on.</p><p><img src="https://d.stockcharts.com/img/articles/2023/11/14/8e621902-f148-4f0c-835c-c0be001e0776.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 2: TREASURY YIELDS AND US DOLLAR FELL WHILE BOND PRICES RALLIED. The rally spilled over into bonds, which may be seeing a reversal in their long-drawn downtrend.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><h2>Real Estate Shines</h2><p>Lower Treasury yields helped the Real Estate sector, the leading sector in the Sector Summary. Several stocks in this sector—SL Green Realty Corp. (SLG), Vornado Realty Trust (VNO), and Brandywine Realty Trust (BDN)—have some big range candlestick bars today. One REIT chart that looks compelling is that of Extra Space Storage (EXR). The stock gapped up and moved above its 100-day moving average.</p><h2>Small-Cap Stocks are Showing Signs of Revival</h2><p>In addition to REITs, small-cap stocks also benefit from lower interest rates. After previously being slaughtered, this group of stocks is seeing a significant jump, rising more than 5%. The chart of the iShares Russell 2000 ETF (IWM) reflects the action in the small-cap stocks. Although one day doesn't make a trend, it's worth watching this sector, given it has the potential to rise quickly.</p><p><img src="https://d.stockcharts.com/img/articles/2023/11/14/7b06e4ba-99a4-492a-96cf-8555c0584e9f.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 3: SMALL-CAP STOCKS ENJOYED A SPECTACULAR RALLY. The iShares Russell 2000 ETF (IWM) gapped up and closed much higher than its open. The big candlestick today is encouraging and indicates that perhaps it's time to add small-cap stocks to your portfolio.</span><em><span class="image-caption">Chart source: StockCharts.com. For educational purposes.</span></em></p><p>Investing in IWM is a great way to gain exposure to the small-cap sector. You could also identify the top holdings in IWM and invest in some of those. For example, the top three IWM holdings by weight are Super Micro Computer, Inc. (SMCI), Light & Wonder (LNW), and Rambus Inc. (RMBS). All three stocks have a high <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:sctr" target="_blank">StockCharts Technical Rank</a> (SCTR) score (panel above price chart).</p><p><img src="https://d.stockcharts.com/img/articles/2023/11/14/b4972a6a-9c1f-43c0-93ec-8acf1e4c6a86.jpg" style="display: block; margin: 0px auto;"></p><p><span class="image-caption">CHART 4: TOP HOLDINGS OF IWM. SMCI, LNW, and RMBS may have some upside momentum. </span><em><span class="image-caption">Chart source: StockChartsACP. For educational purposes. </span></em></p><p><img src="https://d.stockcharts.com/img/articles/2023/11/14/55641b21-c742-46be-a9a2-c509358280eb.jpg" style="display: inline; margin: 0px 15px; float: right; width: 500px;" onclick="window.open('https://stockcharts.com/special/')"></p><p>The <a href="https://school.stockcharts.com/doku.php?id=technical_indicators:relative_strength_index_rsi" target="_blank">relative strength index</a> (RSI) for SMCI is moving higher and shows there is room for more upside move. RSI for LNW is above 70, but just barely, and the stock did move higher a few days ago, which could mean the stock price could see a pullback. RMBS gapped higher today and is pretty close to its all-time high. If the stock pushes through the high and continues higher, it could move higher. After all, it is a semiconductor stock.</p><p>There are several other small-cap stocks you could explore. Hopefully, today's spectacular rally in small caps nudges you to dive deeper into this group of stocks.</p><hr><p><strong><em>Disclaimer: </em></strong><em>This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.</em></p>October's unchanged headline US CPI and lower-than-expected core CPI were reasons for investors to celebrate. The broader stock market indexes moved higher on the news, and the Fed may start to lower interest rates sooner than expected. All 11 S&P sectors are up, and small caps are seeing a massive rise—up over 5%. This is welcome news, as this group struggled to reach the highs large caps reached. Perhaps it's catch-up time for stocks that have been severely beaten down.CHART 1: THE STOCK MARKET ON TURBOCHARGE. Large caps, tech stocks, small caps, and mid caps all rallied today.Chart...