Bounce still underway as early dip finds strong support

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SPX looks to have begun a late December rally, which started late last week and might last until right after the Christmas holiday. Despite the anemic breadth issues plaguing the market, Technology continues to hold up well and should be favored as a sector to overweight heading into 2025. US Dollar and US Treasury yield trends are short-term positive after a push above November highs, and this combination might prove to be problematic towards the potential for an immediate rally back to new all-time highs in US Equities. At present, sentiment has become more subdued, while Equity momentum has rolled over to negative on a short-term basis, given recent selling pressure.  Moreover, following 14 days of negative market breadth out of the last 16, it’s right to be a bit cautious regarding the longevity of this bounce, as both trends and momentum have grown a bit weaker in the near term. For now, given some notable stabilization, albeit on lesser volume, it’s right to favor a bounce into late this week.

Hourly charts show some impressive near-term stabilization in SPX last Friday that argues for a further bounce in SPX as the holiday season comes into full swing.

Monday’s early pullback ...
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