Market Rebound: A Festive Twist
As the year draws to a close, the major indices have staged a remarkable comeback, erasing losses from last Wednesday’s downturn. This sudden turnaround has all the makings of a classic Santa Claus rally, a phenomenon often seen in the latter part of December.
S&P 500: A Bullish Resurgence
The S&P 500 (SPX) has surged 1.8% in just two days, reclaiming more than half of its recent losses. Moreover, it has recaptured its 50-day average, a crucial technical indicator, and rallied into the bullish channel established in early September. However, the SPX now faces short-term resistance from the declining 13- and 21-day exponential averages, which converge at 5,987.
Nasdaq 100: A Steady Climb
The Nasdaq 100 (QQQ) has demonstrated remarkable resilience, rallying 1.9% in the past two days without breaking down from its bull channel. It has maintained its 50-day average and recaptured its 13- and 21-day exponential moving averages (EMAs). Furthermore, the five-day/13-day EMA crossover is on the cusp of turning bullish, having spent only a brief period in bearish territory.
Mid- and Small-Caps: A Work in Progress
While the S&P 400 and S&P 600 have stabilized near chart support from their early November lows, they still have a long way to go to turn their charts around. Consistent declines since November 25 have taken a toll on these indices, and a more constructive direction is needed to restore investor confidence.
The Bigger Picture
Despite the recent rebound, the SPX remains in a sweet spot, poised for further growth. As the year comes to a close, investors are advised to stay vigilant, monitoring market trends and technical indicators to make informed investment decisions.
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