{"id":12519,"date":"2024-11-22T00:03:29","date_gmt":"2024-11-22T00:03:29","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/11\/22\/financial-upswing-understanding-the-stock-market-rally-and-yield-rise\/"},"modified":"2024-11-22T00:03:29","modified_gmt":"2024-11-22T00:03:29","slug":"financial-upswing-understanding-the-stock-market-rally-and-yield-rise","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/11\/22\/financial-upswing-understanding-the-stock-market-rally-and-yield-rise\/","title":{"rendered":"Financial Upswing: Understanding the Stock Market Rally and Yield Rise"},"content":{"rendered":"
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The afternoon turnaround seems to be more the norm than the exception. Thursday\u2019s stock market action followed the trend. What makes Thursday\u2019s turnaround more pronounced is a possible resumption of the uptrend in equities. But not all stocks are created equal.<\/p>\n

A look at the day\u2019s MarketCarpet of the S&P 500 stocks shows an interesting mix. While there was more green than red, some of the heavier-weighted S&P 500 stocks\u2014Microsoft Corp.<\/strong> (MSFT), Apple, Inc.<\/strong> (AAPL), Alphabet, Inc.<\/strong> (GOOGL), Amazon.com, Inc.<\/strong> (AMZN), Meta Platforms, Inc.<\/strong> (META), and Tesla, Inc.<\/strong> (TSLA)\u2014were trading lower. NVIDIA Corp.<\/strong> (NVDA) managed to eke out a slightly higher close despite its sharp drop after reporting earnings after Wednesday\u2019s close. Earnings and revenues beat expectations, but the market may have had higher expectations. NVDA\u2019s 0.53% gain didn\u2019t move the needle much in Thursday\u2019s positive move.<\/p>\n<\/p>\n

FIGURE 1.\u00a0 MARKETCARPET FOR THURSDAY, NOVEMBER 21. A lot of green, but not from the heavily weighted large-cap stocks.<\/span>Image source: StockCharts.com. For educational purposes.<\/span><\/em><\/p>\n

An initial glance at the MarketCarpet screams the need to view the chart of the S&P 500 Equal Weighted Index<\/strong> ($SPXEW).<\/p>\n

Technical Support Holds<\/h2>\n

Comparing the chart of $SPX with $SPXEW<\/a> shows that the latter made a bigger move on Thursday. Regardless, both indexes bounced above their 25-day <\/span>simple moving averages<\/a> (SMAs).<\/span><\/p>\n<\/p>\n

FIGURE 2. S&P 500 VS. S&P 500 EQUAL-WEIGHTED INDEX. The S&P 500 rebounded and closed higher toward the top end of the day\u2019s range. Most of the heavily weighted stocks in the index closed lower, so it\u2019s no surprise that the S&P 500 Equal-Weighted Index made a more significant move.<\/span>Chart source: StockChartsACP. For educational purposes.<\/span><\/em><\/p>\n

The positive slope of both indicates the uptrend is still in play. Both are close to their 52-week highs (see lower panel). The $SPXEW is only 0.54% from its high whereas the $SPX is 0.88% away.<\/p>\n

It\u2019s a similar scenario with the Nasdaq Composite<\/strong> ($COMPQ) and Nasdaq 100 Equal-Weighted Index<\/strong> ($NDXE), although Thursday\u2019s upside move was much smaller than that of the S&P 500 (see chart below<\/a>).<\/span><\/p>\n<\/p>\n

FIGURE 3: NASDAQ COMPOSITE VS. NASDAQ 100 EQUAL-WEIGHTED INDEX. Both indexes are above their 25-day SMAs, which have a positive slope. Both are also close to their all-time highs.<\/span>Chart source: StockChartsACP. For educational purposes.<\/span><\/em><\/p>\n

$COMPQ and $NDXE are trending higher (their 25-day SMAs are trending higher), but the last bar in $NDXE shows more upside movement. Both indexes are approaching their 52-week highs\u2014$COMPQ is 1.72% away, while $NDXE is 0.99% away.<\/p>\n

The Nasdaq Composite chart shows some selling pressure, but it\u2019s trading above its July high. If it maintains that position, going forward, it will be bullish for the index.<\/p>\n

Even though the Dow Jones Industrial Average<\/strong> ($INDU) may not be as popular as it once was, it, out of the three major equity indexes, rose the most, closing up by 1.06%. It, too, had a turnaround day, bouncing off its 25-day SMA on Tuesday, and is also approaching an all-time high.<\/p>\n

The biggest winners were small and mid-caps. The S&P 400 Mid Cap Index<\/strong> ($MID) and S&P 600 Small Cap Index<\/strong> ($SML) are both above their November lows and approaching their all-time highs (see chart below<\/a>).<\/span><\/p>\n<\/p>\n

FIGURE 4. MID CAPS VS. SMALL CAPS. Both indexes had significant moves on Thursday. The trend continues to be bullish and both are approaching their all-time highs.<\/span>Chart source: StockChartsACP. For educational purposes.<\/span><\/em><\/p>\n

The Extended Factors Dashboard panel<\/strong> shows the mid-cap revenue and momentum ETFs were Thursday\u2019s top percentage movers.<\/p>\n<\/p>\n

FIGURE 5. EXTENDED FACTORS DASHBOARD PANEL. Mid-cap revenue and momentum were the largest percentage winners on Thursday.<\/span>Image source: StockCharts.com. For educational purposes.<\/span><\/em><\/p>\n

The big-picture view of the equity markets:<\/strong> After the post-election pullback, equities seem to be making a comeback. The big question is whether they will have the momentum to break above their all-time highs.<\/p>\n

The Bond Market\u2019s Narrative<\/h2>\n

While equities are rising, you can\u2019t ignore what\u2019s happening in the bond market. Treasury yields are climbing in tandem with equities. This is mainly due to strong economic growth and concerns of possible inflation with the new administration\u2019s implementation of tariffs and tax cuts. We\u2019ve already heard the CEO of Walmart chime in with his concerns about consumers having to pay more due to tariffs.<\/p>\n

As yields rise, bond prices fall. The daily chart<\/a> of the <\/span>iShares 20+ Year Treasury Bond ETF<\/strong> (TLT) below shows that since September 17, TLT has fallen over 12%. That was around the time the Federal Reserve announced a 50 basis point interest rate cut.<\/span><\/p>\n<\/p>\n

FIGURE 6. DAILY CHART OF TLT. TLT fell over 12% since September 17, which is around the time the Fed cut interest rates by 50 basis points.<\/span>Image source: StockCharts.com. For educational purposes.<\/span><\/em><\/p>\n

Closing Bell<\/h2>\n

While the macroeconomic picture is positive, investors are concerned about the possibility of reinflation, especially if tariffs are implemented. We\u2019re still a few months away from January 20, so it wouldn\u2019t be surprising to see more choppiness in the stock and bond market from now until the end of the year.<\/p>\n

Geopolitical tensions could also rise. If the trend in equities continues to be bullish, just stay your course and hold on to your positions. But if there\u2019s any change, such as a negative slope in your preferred moving average or a decline in market breadth, it may be time to unload some of your positions and have some cash sitting on the sidelines.<\/p>\n<\/p>\n

Disclaimer:<\/em><\/strong> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The afternoon turnaround seems to be more the norm than the exception. Thursday\u2019s stock market action followed the trend. What makes Thursday\u2019s turnaround more pronounced is a possible resumption of the uptrend in equities. But not all stocks are created equal. A look at the day\u2019s MarketCarpet of the S&P 500 stocks shows an interesting […]<\/p>\n","protected":false},"author":0,"featured_media":12520,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-12519","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/12519","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=12519"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/12519\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/12520"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=12519"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=12519"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=12519"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}