Market Watch: Top Experts Reveal Key Charts to Monitor in 2025
As investors look ahead to 2025, one question looms large: will the stock market’s bull rally continue? To gain insight into what lies ahead, we turned to Wall Street’s top technical experts, asking them to share the most important stock market charts to watch in the new year.
Interest Rates: A Critical Factor
According to Craig Johnson, chief market technician at Piper Sandler, the 10-year UST yield has reversed a long-term secular downtrend, with a higher high above 3.25% validating the multi-decade reversal. Historically, post-trend reversals are followed by a retest, which Johnson expects to occur around 3.00%-3.50% in the second half of 2025. A decisive break below this level would signal serious economic trouble.
Software Stocks: Poised for Takeoff
Jay Woods, chief market strategist at Freedom Capital Markets, believes 2025 is the year technology will shine, with software stocks leading the charge. Technically, Woods sees a beta full-rounded bottom base forming over a two-year stretch, with a breakout in 2024 and a beautiful upside gap in October. This gap presents a perfect risk-reward setup, with a downside risk area to watch at the 95 level and upside targets suggesting a 20% increase.
Market Breadth: A Key Indicator
David Keller, chief market strategist at Sierra Alpha Research, is keeping a close eye on measures of market breadth, including the advance-decline line, the percent of stocks above their 50-day moving average, and new 52-week highs and lows. The post-election rally in Q4 has featured narrow leadership, and continued breadth deterioration into early 2025 could signal a weaker start to the year and an increased likelihood of a corrective move in Q1.
S&P 500: Consolidation Ahead?
Will Tamplin, senior analyst at Fairlead Strategies, notes that the S&P 500 Index nearly met a measured move projection of 6118 in December, indicating a prolonged period of consolidation is likely in the first half of 2025. The monthly MACD histogram suggests momentum behind the uptrend has started to wane in Q4, further supporting corrective price action to start 2025.
Bull Markets: A Historical Perspective
Ryan Detrick, chief market strategist at Carson Group, reminds us that bull markets can be hard to stop once they gain momentum. Historically, bull markets that make it into their third year have lasted at least until their fifth birthday, with an average gain of eight years. This suggests there may be more room to run for the current bull market.
Momentum Stocks: A Key Factor
Ari Wald, managing director at Oppenheimer, is watching the performance of high-momentum stocks vs. low-momentum stocks, which has historically outperformed in the period between the cycle’s broadest moment and the market’s final peak. Wald sees two potential scenarios: either the bull cycle broadens further, driven by “catch-up” into low-momentum stocks, or it narrows, weighed down by low-momentum, with the momentum factor continuing to outperform.
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