Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

The major U.S. stock indexes gained over 1% in a holiday-shortened trading week, extending the prior week’s positive momentum.

The S&P 500 and Dow reached new record levels, while the NASDAQ finished slightly below its all-time high set three weeks earlier.

In November, U.S. stock indexes surged, marking the sixth positive month out of the last seven and recovering from a modestly negative October.

The Dow gained approximately 7.5%, the NASDAQ climbed 6.2%, and the S&P 500 advanced 5.7%.

While 2024 has seen its share of market volatility, it has been largely subdued overall. Inflation worries flared in April, concerns about labor market weakness and tech stock growth surfaced in early August and September, and October delivered its typical pre-election volatility. However, these episodes were relatively brief and mild.

This year, multiple asset classes have achieved numerous all-time highs. The Russell 2000 Index hit an all-time high last Monday, its first since 2021, while the S&P 500 has set over 50 new records this year. Notably, the S&P 500 has experienced only three daily declines of 2% or more, significantly below the 10-year average of nearly nine per year.

The exceptional performance of U.S. stocks in 2023 and 2024 can largely be attributed to significant gains in a small group of tech-focused mega-cap stocks.

These stocks’ heavy weighting has amplified their influence on popular indexes like the S&P 500, resulting in historic index concentration. Today, the top 10 companies in the S&P 500 account for nearly 35% of the index.

Recently, market leadership has expanded beyond this narrow group of large-cap tech stocks, providing a healthier environment for the bull market’s momentum to persist. Financials have surged over 50% in the past 12 months, overtaking previously dominant sectors like technology, consumer discretionary, and communication services. Industrials and utilities have also seen notable gains, both rising over 30% in the same period.

Additionally, asset class leadership has rotated, with U.S. small- and mid-cap stocks outperforming over the past 12 months, driven by strong performance since the fourth quarter began.

In the short term, I’ll be closely monitoring key S&P 500 support levels near 5850–5860, 5695–5700, and my “line in the sand” at 5650. A sharp break below 5650 could signal a more bearish trend. Stay tuned!

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Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

This year’s market performance continues to deliver strong returns

Last week, the S&P 500 gained 1.7%, bringing its year-to-date move to nearly 25% and keeping stocks on track for a potentially strong finish to 2024. The Nasdaq also posted a 1.7% gain for the week.

The Russell 2000, the U.S. small-cap benchmark tracked via the IWM ETF, surged 4.5% last week, with a November month-to-date gain nearing 10%. This rally was fueled in part by a post-election small-cap surge.

Bitcoin, the most widely traded cryptocurrency, hit another record high for the third consecutive week.

After closing the previous week at around $91,000, it climbed above $99,000 by Friday afternoon. At the start of November, Bitcoin traded near $70,000, reflecting its strong upward momentum.

While overall market valuations remain elevated, largely driven by mega-cap technology stocks, not all sectors are overvalued. Many areas of the equity market are trading in line with or at a discount to their 10-year averages.

NVIDIA’s latest earnings report and its stock reaction underscore the headwinds created by high expectations.

The broader tech sector is consolidating to digest its substantial gains from the past two years. The Nasdaq 100, relative to the S&P 500, peaked in July and has moved sideways since, indicating a shift away from tech dominance.

Leadership is now broadening. Financials and industrials, which trade at cheaper valuations, are emerging as market leaders. These sectors are poised for earnings acceleration after a two-year lull, contributing to the rally’s sustainability.

The forward price-to-earnings ratio for U.S. large-cap stocks is nearly 22—30% above its historical average. While valuations expanded more than 10% in both 2023 and 2024, a repeat performance in 2025 seems unlikely. The only comparable period over the last 30 years was the late 1990s leading up to the tech bubble. However, unlike that era, today’s leading tech firms—the “Magnificent 7”—are highly profitable and maintain strong balance sheets.

Looking ahead, traders may want to shift focus to value-oriented investments and small- to mid-cap companies that derive more revenue domestically.

These stocks could benefit from stronger U.S. growth and lower tax rates. Long-term opportunities also exist in overlooked areas that have lagged since the bull market began two years ago.

And remember… trade what you SEE, not what you THINK!

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Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

This past week, stock markets gave back some of the strong post-election gains.

The S&P 500 was down about 2% for the week, although gains for the full year still exceed 23%, and the index is up over 1% since U.S. election day.

Overall, we are now entering a seasonally stronger time of year for markets. Historically, November and December have been positive months, especially in election years, and momentum may resume in the weeks ahead. However, after a strong year in the markets, and an especially strong post-election rally, some of these gains may have already occurred.

Technically, we are seeing signs of deterioration in several indicators. The plurality of advancing vs. declining stocks has narrowed, as have up/down volume numbers. The number of new highs vs. new lows has turned negative. The VIX volatility index ramped up last week, suggesting rising concerns over valuations and speculation, particularly in lower-priced and biotech stocks, potentially signaling a topping process.

Government policy and international uncertainty will continue to impact markets and may spur bouts of volatility.

However, assuming no major external shocks and the potential for pro-growth policies ahead, indices may continue to climb these “walls of worry.” While the pace of this bull market’s gains may moderate, pullbacks could be viewed as opportunities, especially if economic and earnings growth continue to support market expansion—unless, of course, key technical levels are breached.

Technically, the S&P 500 closed near initial support around 5850. Should that level break, I view additional key support near 5780-85 and then 5695-5700. A breach of these levels could extend the pullback, potentially sharply, with lower support around 5665 and 5565 (.50 Fib) off the August low at 5110.

Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

Major U.S. indexes suffered their second straight losing week, even as stocks rebounded on Friday from Halloween’s tech-driven plunge.

Treasury yields reached new four-month highs despite light October job growth, while volatility remained firm ahead of Tuesday’s election. Although the major indexes regained positive momentum on Friday, the S&P 500 index (SPX) rose 23.35 points (0.41%) to 5,728.80, ending the week down 1.37%, and the Nasdaq Composite ($COMP) gained 144.76 points (0.80%) to 18,239.92, ending the week down 1.50%.

The S&P 500 slipped 1.0% in October, breaking a streak of five consecutive monthly gains. Over the past 12 months, it was only the second negative month versus 10 gains. The NASDAQ and the Dow were also negative in October, with those indexes falling 0.5% and 1.3%, respectively.

Earnings momentum remained positive, bolstered by results from the biggest technology companies during the busiest stretch of earnings season.

As of Friday, analysts forecast that third-quarter earnings for all companies in the S&P 500 would rise by an average of 5.1%, based on reported results and forecasts for pending earnings, according to FactSet.

U.S. government bond yields rose for the sixth week out of the past seven, though at a somewhat slower pace. The yield on the 10-year Treasury note closed at 4.37% on Friday—up from 4.24% at the end of the previous week and well above a recent low of 3.62% on September 16.

In addition to Tuesday’s U.S. election, the week will bring a two-day U.S. Federal Reserve meeting that’s scheduled to conclude on Thursday—a departure from the Fed’s typical Tuesday-Wednesday schedule for policy meetings. It’s widely expected that the Fed will approve an interest-rate cut of a quarter percentage point, following the half-point cut made in September.

Based on the upcoming election and the FOMC interest rate decision, expect a week of volatility that could present strong trading opportunities!

Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

The stock market’s recent streak of weekly gains was interrupted last week, as rising bond yields began to attract investors’ attention.

The S&P 500 and the Dow fell around 1% and 3%, respectively, snapping a six-week string of positive results. The NASDAQ edged upward to post its seventh weekly gain in a row, lifted by strong results from technology stocks.

Although its closing level on Friday didn’t break a record, the NASDAQ briefly hit an all-time intraday high earlier in the day. At Friday’s close, the index was 0.7% shy of the record close set three and a half months earlier. In contrast, the S&P 500 has largely been in record territory since mid-September.

The Best performers last week in the S&P 500 index were Tesla (TSLA)+22%, Philip Morris (PM) +8% & General Motors (GM) +6%

Just over a month has passed since the Fed kicked off a new easing cycle, cutting its policy rate by a larger-than-typical half a percentage point. Yet, during that time, both 2- and 10-year Treasury yields have climbed, challenging the prevailing narrative.

Could the rally in rates pose a serious threat to the stock market’s momentum?

Along with the strong economic data, markets have had to absorb an upside surprise in inflation, leading to expectations for a more gradual and shallower rate-cutting cycle than anticipated at the September Fed meeting. Also, the U.S. presidential election on November 5 is fast-approaching and is raising fiscal concerns. Based on campaign proposals, the elevated debt will likely increase further under both candidates. 

Recent rate volatility in the U.S. Treasury market reached its highest since last December, with the 10-year yield climbing from around 3.60% to 4.20%

Financial market signals have been broadly positive. Since the Fed’s initial rate cut, sector leadership has been balanced, with both growth and cyclical sectors outperforming defensives, while credit spreads have tightened to historically low levels.

Now near the midpoint of earnings season, a handful of U.S. mega-cap technology stocks are expected to continue generating a disproportionate share of overall earnings growth. Analysts expected that the Magnificent Seven will generate average third-quarter growth of 18.1%. In contrast, the other 493 companies in the S&P 500 were projected to produce growth of 0.1%.

Given the strong equity gains year-to-date and election uncertainties, a further rise in yields could lead to some market volatility.

I believe the markets are near a KEY point in the intermediate trend and could be on the verge of an important short term move.

Whether its a crack of important support and a substantial pullback or a spike up/blow off phase isn’t clear.

Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

Last week marked the two-year anniversary of the current bull market, with stocks gaining about 60% since the October 2022 bottom.

Historically, most bull markets make it to the end of year three, but returns tend to moderate.

I have seen many bull markets over the last 60 years, and in most cases, the markets DO NOT accommodate the majority. Although I agree that many stocks and indices are extended, what stands out to me is that a large majority of bright technicians are calling for a top.

Most current evaluations have limited room to increase further, so earnings will likely need to carry the heavy load if markets are to build on their gains. As the third-quarter earnings season kicks off, I will need to see more signs of earnings broadening that can support the recent leadership rotation.

Two years ago, on October 12, 2022, inflation was above 8%, the Fed was in the midst of a historically aggressive rate-hiking campaign, and the S&P 500 had dropped 25% off its high. However, as is often the case, widespread pessimism at the time gave way to a new bull market, which continues to this day. Since then, stocks have gained 60%, and the S&P 500 has reached 45 new record highs.

How far have we come?

U.S. large-cap stocks increased 24% in the first year after the October 2022 low and gained another 35% in the second year, which wrapped up last week. While the combined 60% gain may seem excessive at first glance, it is right in line with the historical average of the past 11 bull markets going back to 1957.

The average duration of the last 11 bull markets has been nearly five years, with most of them (eight out of 11) making it to the end of the third year.

This suggests that the current bull might still be in its early or middle phase. However, year three might not be a smooth ride. Third-year returns tend to moderate, with stocks advancing only half the time, while in the other half, stocks pulled back to catch their breath.

As the old adage goes, bull markets don’t die of old age, but from a recession, overly tight Fed policy, or an external shock. The latter is impossible to predict, but with the odds of a recession decreasing and the Fed embarking on a rate-cutting cycle amid a healthy labor market, I suspect the bull market may continue into its third year.

However, elevated valuations, geopolitical risks in the Middle East, and a tight U.S. presidential election could act as catalysts for short-term volatility.