SGT Chart Book
US Equity markets see Dow Jones trade to All-time highs (ATH)
S&P 500 Weekly Winning Streak Is Longest in 6 Years (since November 2017)
The Dow Jones Industrial Average set a record for a third straight day Friday to cap a strong week for stocks. The S&P 500 advanced for a seventh consecutive week, its longest winning streak in six years.
The Federal Reserve hinted Wednesday it could cut interest rates next year. Rate cuts would mark a major turning point in the Fed’s roughly two-year campaign to control inflation.
The Dow rose to a record 37305.16 points on Friday.
All 3 indices (Dow, SP500 and Nasdaq were up more than 2% for the week.
Traders have reset their interest-rate expectations for next year, sending the 10-year yield down over a percentage point since late October from highs above 5%. That means borrowing costs are lower and financial conditions are “easier” in Wall Street parlance, helping spark a rally in many of the riskier, rate-sensitive assets that investors had shunned over the last two years.
The Russell 2000 index has done someithng quite remarkable in the last 48 days, making a new 53 week high on Thursday after hitting a 52-week low 48 days ago.
There is now debate over whether the strong market rally in response to Wednesday’s Fed meeting complicates the central bank’s path. Traders are currently pricing in at least five rate cuts next year, more than the three the Fed has forecast. Some investors say economic growth is too strong for the Fed to cut that many times.
On Friday, a senior Fed official said that central-bank policy makers weren’t actively debating when to cut interest rates, an apparent effort to temper markets’ exuberant interpretation of the comments that Chair Jerome Powell made two days earlier.
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So close to ATH’s, can we trade above before end of the year.
ATH test next week?
US 10-YEAR NOTE
Quite a turnaround, after highs above 5%, while we close on Friday below 4%.
Shows side ways trading for most for 2023.
Short term 50% retracement held, with test of previous highs.
Double top and break down below major up channel.
Long term down trendline on weekly chart dominates, with current USD weakness will we see a test before end of the year.
Testing resolve of dollar bulls, trendline support just below current rates.
Breach of down sloping trendline
Gold seem to like Feds comments. Lower $, higher Gold
Breach of up and downside trendlines. Bias to upside into year end.
Support seen around the 66/68 zone. Trend line resistance way above market.
Continued strength despite bearish divergences.
Horizontal line needs to hold for continued strength, a break here coupled with bearish divergencies sees lower levels and our favored short term view.
Investors have also switched from fear to greed in the options market. The VIX gauge of implied volatility this week reached its lowest since before the pandemic lockdowns in 2020.
Disclaimer: Trading Desk Observations are not trade recommendations. The purpose of these charts is to bring to your attention potential chart patterns you may wish to monitor.
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