Technical trends for US Equities are bullish, but technicals still support the idea of some consolidation in December before a push back to new highs. Interest rates and the US Dollar have both begun to push higher despite bullish JOLTS data on Tuesday, and some underperformance in some of the defensive sectors has played out since late November, coinciding with the bounce. While I expect an eventual push up to new highs in late December, I’m not expecting this to happen right away, and the Fed meeting might coincide with a short-term peak for SPX. Bottom line, trends are bullish from late November, but I am still anticipating a choppy period over the next week before the price can push higher.
^SPX weakness looks to have happened on schedule into this week and suggests some consolidation should be likely for US Equities before gains back to new highs can occur. The risk/reward doesn’t look as compelling in the near-term technically into the FOMC meeting, given multiple indices and Equity-based ETFs and Sectors up near resistance.
Furthermore, both the US Dollar and US Treasury yields have now begun to push higher as global central bank easing could very well be complete for many of the G-10 central banks, with FOMC, BofE, and Norges Bank being the lone exceptions.
The near-term positive with regard to sector rotation highlights that some of the stronger sectors in the last month, which were defensive in nature, have recently underperformed, such as Healthcare, Utilities, REITS, and Consumer Staples. This is helpful to see in terms of a sector rotation coinciding with the recent bounce from late November, and I anticipate strong gains into January from Technology, along with Industrials and Financials, not to mention some catch-up mean reversion out of the Transportation sector, which should help Industrials.
As this table shows below, most of last week’s weakness happened within the Defensive sectors. Meanwhile, both Financials and Technology were higher by more than 2%.
Invesco S&P 500 Equal Weight ETF
Defensive groups like Healthcare have all begun to show relative weakness since late November
Interestingly enough, the bounce from Healthcare relative to Equal-weighted S&P 500 over this past Summer managed to hold resistance at exactly the same area, which aligns with the ongoing downtrend over the last two years.
I often find it helpful to keep relative charts like this handy, as these areas can often coincide with meaningful support and/or resistance when touched.
This adds a bit more credence to the idea of an eventual push in US Equities back to new highs, given the weakening in Defensive sectors like Healthcare, Utilities, REITS, and Consumer Staples.
Given the strength in Biotech, Med Tech, Healthcare Services, and many Pharmaceutical stocks in the last month, I think it’s worthwhile to still keep a close eye on Healthcare for any evidence of stabilization and early-year strength in 2026.
Breaks of this relative downtrend would be bullish for Healthcare. However, for now, I don’t see sufficient technical strength to have a bullish technical opinion on this sector outperforming heading into next year.
RSPH/RSP
China is weakening in the short run, and this might continue for another 1-2 weeks as the US Dollar gains ground
Despite a clear affirmation on 2026 policy initiatives by the Politburo for continued stimulus next year, today’s price action is bearish for the HSCEI (Hang Seng China Enterprises Index), which many consider to be the more “liquid” index of China when compared to the Shanghai Composite.
As seen below, the iShares China Large Cap ETF (FXI) shed over -1.6% today, which technically is negative and could lead to a coming break of November lows, based on its current pattern, before this can stabilize and move higher.
Today’s drop broke the minor uptrend from late November and could lead to a test and break of the Nov lows at 38.15. Ideally, the area to buy dips lies at $37.09, but initially, $38.15 is seen as possible near-term support. The entire pattern for Chinese equities has remained in consolidation since September, and its pattern has proven choppy and neutral. That’s still the case when looking over the last few months, but today’s decline is a short-term negative and is thought to take FXI lower over the next 1-2 weeks.
iShares China Large-Cap ETF
Silver’s breakout vs. Gold has shown steady Silver outperformance; Gold should kick into gear and strengthen relatively speaking, starting early next year
As shown below, the last three weeks have brought about a rapid period of outperformance for Silver prices over Gold.
Indeed, Silver has pushed back to new all-time highs, while Gold has stalled out a bit in the last month. Recent outperformance from Silver was quite evident in today’s trading, as Silver front-month futures rose nearly 4% to break out of a range that has held since 12/1.
This is bullish for SLV on an absolute basis, and the relative ratio chart between the iShares Silver Trust and the Gold Trust has now begun to accelerate to overbought levels.
Counter-trend indicators are now present on a weekly basis on the ratio charts of SLV to GLD, and could be in place on a monthly basis by January 2026.
Thus, while Silver has outperformed sharply over the last month, it’s likely that Gold will soon play catch-up and make its own move back to new all-time highs.
In general, the health of the metals rally tends to be more constructive when both Silver and Gold are pushing higher. Sharp divergence can often lead to a peak in price. Weekly and monthly RSI are both back in the mid-80s, so Silver is clearly overbought, but I suspect that a push up to $58.51 can happen for SLV, which would allow the 11/21-12/1 move to be equal in points gained.
However, Gold could prove to be the better risk/reward in the short run. Given dramatic Silver outperformance, it looks right to favor both Gold as well as the Gold Metals and mining shares over the next few months. Newmont Mining’s +5.72% gains (NEM) were the best of any stock on the S&P 500 on Tuesday. Stocks like AU remain part of Upticks and should still be held.
SLV/GLD
Gold and Silver miners look attractive for a push back to new highs
One trade that I think looks compelling from a risk/reward standpoint is to own the Gold Metals and mining names.
GDX, as shown below, the VanEck Gold Miners ETF, still ranks healthy technically, having formed a giant triangle formation in recent weeks.
This GDX pattern still could be resolved by a push back to new all-time highs into year-end, coinciding with Gold pushing back to new highs to join Silver.
While Silver Miners also look appealing, they’ve gotten stretched after the recent rally in Spot Silver.
Meanwhile, Gold’s underperformance looks to have created an optimal risk/reward for a breakout of this triangle pattern in the weeks to come.
Any weekly close back above $84.03 from the current $81.94 close should result in GDX pushing higher up to near $90-$91.95, which looks important on the upside.
On the downside, it would take a break of $76 to postpone the rally in the Gold Mining names, and this still looks quite premature.
Overall, technically speaking, it makes sense to position in GDX at current levels before this begins to trend higher to break $84.03, the early December peaks.
VanEck Gold Miners ETF
