SGT Chart Book: The Year-End Rally Continues

sgt_chartbook

Hopes that the Federal Reserve is done raising interest rates turbocharged a broad-based rally, driving prices of everything from stocks to Treasuries and gold sharply higher.

The Dow Jones Industrial Average added 2.4% for the week, notching a fifth weekly gain to mark its longest-winning streak since late 2021. The S&P 500 added 0.8% and closed at its highest level since March 2022. The tech-heavy Nasdaq Composite added 0.4%.

On Friday, Federal Reserve Chair Jerome Powell offered the strongest signal yet that officials are likely done raising rates, saying the central bank’s policy is “well into restrictive territory.” His comments were laced with caution, but they appeared to reassure investors who have been digging in on expectations of rate cuts next year.

Powell’s comments, alongside new economic data, fueled a wave of buying in the government-bond market that drove the yield on the 10-year Treasury note down to 4.225%, the lowest level since early September. The yield on 2-year Treasuries, which are especially sensitive to interest- rate expectations, recorded the biggest weekly decline since March, around the time Silicon Valley Bank collapsed.

Many investors entered the year with a more cautious stance, and the advance in stocks and government bonds has only accelerated. Now, some investors appear to be eyeing bigger gains in the final weeks of 2023. The Dow is off 1.5% from its record highs.

USA30

Eying test of record highs…

USA500

Testing 4600 previous highs resistance area.

US10-YEAR

Trendline support hovers below the recent sell off in rates.

DXY

This chart puts the year into perspective - basically sideways for 2023. Recent pullback in the dollar index tested 61.8% retracement of the up leg.

EURUSD

A mostly sideways year…

USDMXN

Longer term trendline resistance seen on daily chart.

XAUUSD

Testing historical highs. Is this time going to see a break higher?

XAGUSD

The break above trendline resistance, mentioned last week, has the bulls in control.

BTCUSD

New highs for this cycle continue. Short-term trendline support seen on charts.

Until next week, happy trading.
SGT Trade Desk

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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