Can The Record Rally Continue?

We joked about “No Sell November” earlier in the month, but it really did come true in markets. 🀣

All U.S. major indexes were up between 8% and 12%, with other asset classes participating in the rally. The Dow Jones Industrial Average closed at its highest level of the year. Heck, the traditional 60% equities and 40% bond portfolio had its second-best month in 30 years, according to Bespoke Investment Group.

Despite the broad optimism in prices, some are still concerned about the breadth of the market. They suggest that mega-cap technology stocks dubbed the “Magnificent Seven,” are the only thing pulling the market higher. However, some technical analysts shared a chart today that could suggest that it may be changing. πŸ‹οΈ

Below is a ratio chart of the equally-weighted S&P 500 ETF ($RSP) divided by the cap-weighted S&P 500 ETF ($SPY). These types of charts are nothing more than a fraction plotted over time, so when the line rises, it means that $RSP is outperforming $SPY. And when the line falls, it’s underperforming. βš–οΈ

What the chart below shows is that after a long 2023 of underperformance by the equal-weighted S&P 500, it could be turning a corner. That’s because prices have stabilized at around the same levels they did during 2020 and are beginning to turn higher. πŸ‘‡

Now, technical analysts argue that this shows an improvement in breadth, meaning that more stocks are beginning to participate in the rally. And that’s a good thing because other stocks are rising to offset weakness in the mega-cap tech names that have already risen so much (and may need to rest or correct). πŸ‘

While this theory still needs time to prove itself, we wanted to highlight the chart and concept because they’ll be a big part of the conversation through the year’s end and into 2024. πŸ‘€

Learn More About...

More in   Stocks

View All

Investors Chew On New Opportunities

With the stock market looking to close out an epic fourth-quarter run and overall 2023, investors and traders continue to look for opportunities in beaten-down areas of the market. πŸ•΅οΈβ€β™‚οΈ

One of the stocks popping up on traders’ radars today is online pet retailer Chewy. The last time we checked in on the stock was in September when the trend of investors ditching unprofitable companies pushed shares to new all-time lows.

Read It

Trading Competitions: Week 4 Recap

This week’s competition was filled with new names, a change from the last few weeks when several long-term Stocktwits users dominated the leaderboards. But what didn’t change was traders making big gains; let’s see how they did. πŸ‘‡

Coming in third place was HaltTradeAlert, who made a bullish bet in the pharmaceuticals sector and delivered a 52% weekly gain. Next up was Chaz Russell, who posted a 179% gain after placing bullish bets on Netflix, Carvana, Meta, and other stocks across several sectors. πŸ‘€

Read It

Stocks Reverse From All-Time Highs

For seemingly no good reason, the stock market experienced its first bout of volatility in several weeks today. The sharp turnaround had some latecomers to the party asking how this could happen to them. As such, it seems like a good time to update our handy S&P 500 roadmap we’ve shared throughout the year. πŸ—ΊοΈ

The last time we checked in on this was in early November when stocks found support at a confluence of “technical” levels that many market participants were watching. Since then, it’s been quite the wild ride, with the S&P 500 rallying over 16% in about eight weeks and approaching its all-time highs from 2022.

Read It

Traders Eye IPOs Into 2024

After a rough patch from late 2021 through 2022, this year, the initial public offering (IPO) tried to make a comeback. Now, traders say 2024 could be the year this turnaround really comes. πŸ‘Β 

Below is a chart of the Renaissance IPO ETF ($IPO), which is up about 53% so far this year. But technical analysts and traders say that its recent breakout to roughly eighteen-month closing highs signals a critical trend change in prices. They argue that prices staying above the 35-37 range, which has previously served as an inflection point in the stock, would suggest momentum has shifted firmly to the upside.Β πŸ™ƒ

Read It