Equity trends from August remain bullish, and SPX has neared the upper edge of its four-month channel resistance while the NASDAQ Composite has now pushed back to new all-time highs. Treasury yields and the US Dollar are both positioned technically for declines in December, and their recent weakness has not yet had any effect on the current appetite for US Equities. Thus far, no evidence of consolidation has played out which lines up with cycle projections and lackluster breadth since September. Overall, while Sentiment, cycles, and DeMark signals, along with lackluster Technology participation, made SPX seem like a risky bet following its 15% rally in 15 weeks from August lows, there simply hasn’t been any evidence of price weakness. As the saying goes, it remains difficult to bet against uptrends in December. While I expect some consolidation in SPX before the price gets above 6100, it could be limited to 5950 given the recent breakout in stocks like AAPL, which are important to SPX and QQQ. Thus, for those looking for a possible near-term consolidation, it could happen from 12/5 until the December expiration before an end-of-year rally.
Overall, pullbacks haven’t happened on schedule, and despite the negative market breadth for US Equities to kick off December 2024 trading, where four sectors out of 11 fell greater than 1%, the bigger news seems to revolve around the NASDAQ Composite finally breaking out above 11/11 peaks.
It seems like the avoidance of this current cyclical downtrend projection might create a larger downward bias in mid-January when the shorter-term cycle looks to peak again.
At present, I find it difficult to embrace SPX at new highs on negative breadth when price is nearing the highs of this trend channel. However, I also feel like it’s difficult to avoid a long bias in December, given no evidence of any technical deterioration. If/when this starts to become apparent later this week, then it will be right to discuss.
At present, the breakout in AAPL seems bullish, and the lack of DeMark confluence on various intra-day timeframes of SPX charts likely points to another couple of days of upward bias before SPX heads into a more difficult stretch for the bullish month of December.
The key area for SPX resistance lies near 6100, while on the downside, pullbacks might find initial support near 5950. (The larger “line in the sand” will remain 5853, lining up with early November lows as well as former early October peaks.) Until/unless that level is breached, then pullbacks in December will likely prove short-lived and buyable.
S&P 500 Index
AAPL breakout is a short-term positive for Technology
Just as I mentioned, NVDA’s recent slide is being negative for markets potentially given its size and also for the Semiconductor sector lately; one also has to give AAPL 0.44% credit among Tech Hardware behemoths for having just broken back out to new all-time highs.
This is quite important as a tailwind for SPX given its 7% weighting, and even larger weighting in QQQ. While breakouts in relative charts of Technology to SPX have not yet occurred, this breakout in AAPL could possibly help the stock advance to $252 in the near-term.
It’s noteworthy for DeMark practitioners that AAPL 0.44% is potentially within two weeks of signaling weekly exhaustion based on the TD Sequential indicator, while monthly TD Sequential “13 countdown” signals are also present this month for AAPL while the TD Sell Setup is “on an 8 count”. Simply stated, there is a possible confluence of signals for AAPL that argue for a possible short-term peak in the month of January 2025 (and even more monthly signals could be possible by March).
Yet, the stock technicals look excellent on a breakout of this ascending triangle pattern and should help this stock extend higher in the near term. My mid-month AAPL target lies at 245, with 252 likely proving to be strong resistance.
Apple
December’s track record is tough to shake after entering the month with 25%+ gains from January-November
This year’s 26% gains Year-to-date for the S&P 500 solidify this year as one of the best Election years over the last 40 years (and potentially much longer going back over 80 years, depending on which benchmark is used).
As can be seen, in the prior years where January-November performance was up 25% or better, the balance of the year was higher in all prior five occasions.
Thus, while some of the cycles I look at do suggest some mid-month consolidation, I’m not certain this will lead to too much in such a bullish seasonal month when performance has been so good thus far.
S&P 500’s December After +25% Through November
Consumer Discretionary strengthens enough to achieve a relative breakout vs. Equal-weighted SPX
Importantly, “Discretionary” has achieved the same relative breakout vs. S&P 500 in equal-weighted terms as was seen in the financials sector a few weeks back.
Thus, headed into the final weeks of 2024, these are two sectors that are showing more promise heading into 2025. Consumer Discretionary is fourth-best out of 11 sectors in three-month returns through 12/2/24, returning +12.49% in Equal-weighted terms.
While both Discretionary and Financials are getting stretched, with RSI weekly readings above 67 for both sectors, there doesn’t seem to be much evidence for a pullback in either of these sectors, and both have taken on signs of leadership in recent months.
RSPD/RSP
