We have witnessed/experienced an outstanding rally since the end of October which has seen the major US stock indices post a seven-week winning streak. This is extending into the final trading week before Christmas, which means we could also see a “Santa Rally” if the rally continues into the first week of 2025.
The Dow Jones Industrial Average is now trading at a fresh record high, having taken out its old record from early 2022. In other words, it’s taken us the best part of two years to get back to where we started. The Dow is also looking very overbought at current levels. Meanwhile, the NASDAQ 100 is within 1% of its all-time highs while the S&P 500 remains 1.8% below its own record. The question is if US stock indices have the momentum to rally into year-end and beyond. The NASDAQ and S&P aren’t as overbought as the Dow, but all have gone a long time without anything approaching a significant pull-back. But there’s nothing in the manual which says they have to correct before they go higher. But it is unusual to see this kind of relentless move. So, if you’re riding long positions, well done! But don’t forget your risk management. If you’re looking for a shorting opportunity – be careful. And if you’re hoping for a pull-back to go long, make sure you appreciate the nature of the next decline. It may be a good buying opportunity, or it could be the beginning of something more bearish.
The Dow Jones Industrial Average is now trading at a fresh record high, having taken out its old record from early 2022. In other words, it’s taken us the best part of two years to get back to where we started. The Dow is also looking very overbought at current levels. Meanwhile, the NASDAQ 100 is within 1% of its all-time highs while the S&P 500 remains 1.8% below its own record. The question is if US stock indices have the momentum to rally into year-end and beyond. The NASDAQ and S&P aren’t as overbought as the Dow, but all have gone a long time without anything approaching a significant pull-back. But there’s nothing in the manual which says they have to correct before they go higher. But it is unusual to see this kind of relentless move. So, if you’re riding long positions, well done! But don’t forget your risk management. If you’re looking for a shorting opportunity – be careful. And if you’re hoping for a pull-back to go long, make sure you appreciate the nature of the next decline. It may be a good buying opportunity, or it could be the beginning of something more bearish.