Note: There will be no video today, as I’m currently out of the office. I appreciate your understanding.
The near-term trend for US Equities is bullish, but it’s thought that SPX likely won’t immediately break out to new highs into FOMC, and the pattern for the first couple of weeks of December could prove far choppier than the last part of December. Chances for a December rate cut have now risen to near 100% certainty as per Fed Fund futures pricing data, and gradually, we’re seeing sectors like Industrials, Financials, and the Small-cap sector start to rally. Until the Equal-weighted S&P 500 can exceed October highs, however, it’s still thought that Technology is doing most of the “Heavy lifting” of late. The US Dollar has begun to turn lower in the last week, and it’s thought that both US Treasury yields and the US Dollar should begin to weaken with greater velocity post this month’s Fed meeting. Overall, given the market’s snapback from late November, technicals have improved to match some of the bullish seasonality thought possible for this month. Bottom line, trends are bullish, but technicals support further choppiness until post-FOMC.
Despite ^SPX having made nearly no real progress since last Friday’s close (Within 1 point of where ^SPX closed on 11/28), sectors like Industrials, Financials, and the Small-cap sector have begun to snap back.
This is a positive, and my thinking is that a breakout in the Equal-weighted ^SPX (see below), along with IWM 1.83% above fall highs, would be constructive for a sharp rally into January.
As said yesterday, I suspect that a push up to near SPX-6900-20 could be possible this week. However, I don’t expect an immediate breakout until likely after the FOMC meeting.
In the days to come, resistance lies at 6920 while support is found near 6680-5.
However, with the chart below of RSP 0.76% , Invesco’s Equal-weighted S&P 500, the price now lies within 1 point of the fall highs of 192.33. This is thought to be an important level, and a breakout should arguably result in some strength in the broader market during the back half of December into January.
Invesco S&P 500 Equal Weight ETF
Transportation stocks continue to show strong gains following the recent breakout of Summer 2025 peaks
I had highlighted the DJ Transportation Avg last week when this first broke out above this past Summer’s consolidation range, but it warrants still highlighting how strong these stocks have been lately.
While stocks like NVDA -0.99% within Technology have been pretty lethargic in recent weeks as it starts to stabilize, it’s been the Airlines that have largely carried TRAN higher in recent weeks.
The Industrials sector (not shown) has nearly risen to test its Fall highs, and I anticipate a test of all-time highs from Transports as well.
It’s encouraging to see this sector start to strengthen, given a lengthy period of consolidation.
Dow Jones Transportation Average Index
Energy stocks should outperform into FOMC before WTI Crude starts to turn lower
I suspected WTI Crude should begin a sharp decline under $50 into next February, which might adversely affect Energy stocks between December and early next year.
However, this move has not started yet, and it’s important to note that the breakout in the Equal-weighted Energy ETF RYE 2.32% , by Invesco, is seen as a short-term positive to this sector.
As shown below, the ability for RYE 2.32% to have closed above former monthly highs should allow for some near-term outperformance in Energy over the next 1-2 weeks.
One should consider the former peaks in RYE 2.32% near $86 as being very strong resistance, but I feel like this very well could be challenged in December before some weakness takes hold.
Thus, for those inclined to Underweight Energy, there should be some opportunity into mid-December upon a bit more strength in Energy stocks.
Invesco S&P 500 Equal Weight Energy ETF
IWM vs. RSP shows a sharp comeback over the last three weeks for Small-caps after just minor consolidation
As seen below, the Small-cap rally from April into this Fall showed some minor consolidation after having tested key resistance vs. Equal-weighted ^SPX (Relative ratio chart shown of IWM 1.83% vs RSP 0.76% ).
While Small-caps have fared quite well since the April lows vs. the broader market, I expect that there could be even greater outperformance once this resistance level is exceeded.
Given that IWM 1.83% is within striking distance of its own important highs after a quicker-than-expected comeback in recent days, investors should pay close attention if/when the price gets close to former monthly highs near $252.
A push over this level would finally help Small-caps to extend the former breakout to new all-time highs, which proved rather short-lived this past October.
Both RSP and IWM look to be rapidly approaching key resistance, so breakouts in both should serve as a bullish catalyst for the US stock market, likely in late December into January 2026.
IWM/RSP
