Stock market simmers: Indexes continue to hit record highs | chart watcher

The first trading week of December started on a positive note. S&P 500 ($SPX) and Nasdaq Composite While ($COMPQ) broke its all-time high, Dow Jones Industrial Average ($INDU) has moved back slightly. It was not a quiet week, despite modest gains for most days.

Surprisingly, the barrage of news from around the world had no significant impact on stock performance. Broad stock indexes continued their bullish trend despite temporary martial law in South Korea, the collapse of the French government, a speech by Federal Reserve Chairman Jerome Powell and higher-than-expected employment figures.

The sentiment in the stock market is optimistic and volatility is low. that Cboe Volatility Index ($VIX) is now below 13.

The StockCharts Market Carpet The snapshot below shows the weekly performance of the S&P 500. High-density megacap stocks performed well, but the top weekly performers were american airlines (AAL), up 19.83%.

Figure 1. December 6 STOCKCHARTS MARKETCARPETS TOOL. Megacap stocks performed well this week. American Airlines was the best performer this week.Image source: StockCharts.com. For educational purposes.

One area to watch is small-cap stocks. that S&P 600 Small Cap Index ($SML) broke out of its trading range in early November. It then pulled back and bounced off the support level (see chart below).).

Figure 2. S&P 600 Small Cap Index ($SML) daily chart. After breaking out of a trading range in early November, $SML pulled back and bounced off support levels. It then consolidated and collapsed below the scope of consolidation. Are we returning to support levels?Chart source: StockCharts.com. For educational purposes.

Since November 25th, the index has been trending sideways and below the sideways pattern. $SML may return to the support level between 1440 and 1450. Typically, small caps begin to rise in mid-December and continue into the following year. This is known as the “January Effect,” so it’s likely that $SML will break out of that support and head higher. The market breadth indicator (percentage of stocks trading above their 50-day moving average) and bulls versus bears is also decreasing for $SML. We will be watching price action closely over the next few weeks.

A solid week for cryptocurrency

This week was a big one for cryptocurrency. Bitcoin to US Dollar ($BTCUSD) closed above 100,000, marking a record close. weekly chart below This shows that $BTCUSD has shown a strong upward trend after breaking out of its consolidation pattern from March to October.

Figure 3. Bitcoin soars. The cryptocurrency successfully closed above the 100,000 level on Friday.Chart source: StockCharts.com. For educational purposes.

Moving average convergence/divergence (MACD) is very bullish. The rise in cryptocurrency prices shows that investors’ risk appetite is quite strong.

In other news

While broader stock indices may have risen sluggishly and flatly, some stocks have made significant gains, largely due to earnings.

stock DocuSign (DOCU) rose on much better-than-expected earnings. DocuSign’s stock price rose 27.86% on Friday. Lululemon Athletica, Inc. (LULU) is another stock whose stock price rose 15.90% due to its outstanding returns. Other retail and software companies such as Amazon.com, Inc. (AMZN), international business machine (IBM), American Express Corporation (AXP) and home depot (HD) saw a significant percentage gain during Friday trading.

Next week you’ll earn from: Adobe Systems, Inc. (ADBE), Broadcom Corporation (AVGO), Oracle Corporation (ORCL) and costco (expense). All of these stocks posted healthy gains this week. Although the big returns are behind us, there are still some interesting returns ahead.

Bond blues in the rearview mirror?

While government bond yields fell, bond prices rose slightly. weekly chart of iShares 20+ Year Treasury Bond ETF Below (TLT) shows TLT approaching the first resistance line. This has happened before, and it caught me off guard. Lesson learned. But now that your bonds are coming back, you can try again.

Figure 4. Daily chart of TLT. Bond prices are rising slowly, but given the low volatility of bonds, it may be a while before we see a big move.Chart source: StockCharts.com. For educational purposes.

As can be seen in the ICE MOVE index in the bottom panel, bond volatility is low. This means that the bond price movement may be small, so you may want to wait until the next resistance level, just above $102, before buying this time.

Economic data will be released next week, followed by CPI and PPI for November. There is also a Federal Reserve meeting on December 18th. I will wait for these events before making any investment decision on TLT.

According to the CME FedWatch tool:In other words, there is about an 85% chance that interest rates will be cut by 25 basis points at the Fed meeting. It’s more important to hear what the Fed says about rate cuts in 2025. If it is different from the price quoted by the market, it will have a greater impact on the market.

weekend wrap up

• S&P 500 Up 0.96% this weekAt 6090.27, Dow Jones Industrial Average Down 0.60% this week at 44,642.52; The Nasdaq Composite Index rose 3.34% this week. at 19,859.77
• $VIX fell 5.48% for the week, closing at 12.77.
• Top performing categories this week: consumer discretionary
• Worst performing sectors this week: energy
• Top 5 Large Cap SCTR Stocks: Applovin Co., Ltd. (app); Palantir Technologies (PLTR); Reddit Inc. (RDDT); MicroStrategy Co., Ltd. (MSTR); Axon Enterprises, Inc. (Axon)

On the radar next week

• November Consumer Price Index (CPI)
• November Producer Price Index (PPI)
• 30 Year Mortgage Rates
• Profits from Oracle (ORCL), Broadcom (AVGO), Adobe (ADBE), and Costco (COST)

disclaimer: This blog is written for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting a financial professional.