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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