KEY
TAKEAWAYS
- Stocks and bond prices rallied on Monday in response to President-elect Trump’s pick for Treasury Secretary.
- Gold and oil prices fell steeply as concerns of geopolitical risks ease.
- Small and mid-cap stocks were the leaders in today’s equity rally.
It’s a short trading week, and the stock market is rallying. It’s clear that Wall Street liked President-elect Donald Trump’s choice of Scott Bessent for Treasury Secretary.
The broader stock market indexes closed higher, with the Dow Jones Industrial Average ($INDU) closing at a new record. The S&P 500 ($SPX) tried to meet its all-time high, but didn’t. The Nasdaq Composite ($COMPQ), meanwhile, is still struggling to close above its November 7 low of 19084.
Small caps were the best performers. The S&P 500 Small Cap Index ($SML) rose 1.80%, and the S&P 400 Mid Cap Index ($MID) was close behind, rising 1.45%. Both indexes hit a new record high.
Overall, it was a green day in the equities world, as can be seen by Monday’s MarketCarpet.
FIGURE 1. MARKETCARPET FOR NOVEMBER 25, 2024. Overall, it’s a sea of green except for the Energy sector.Image source: StockCharts.com. For educational purposes.
The bond market breathed a sigh of relief—Treasury yields fell, and bond prices rose. The iShares 20+ Year Bond ETF (TLT) rose about 2.59% on Monday. But the gap up in price is just a blip in the weekly chart of TLT (see below).
FIGURE 2. WEEKLY CHART OF TLT. Monday’s gap up isn’t enough to change the big picture. TLT is still trading below its 21-day EMA and close to its 2023 low. It’s a long way from a bullish trend.Chart source: StockCharts.com. For educational purposes.
TLT is still trading below its 21-day exponential moving average (EMA). It’s also close to its 2023 low. One day doesn’t make a trend, but it’s worth watching this chart closely.
While stocks and bond prices rose, other assets that have been rallying lately saw significant declines. Gold prices, oil, and the US dollar experienced steep declines on Monday. Some news surfaced that a peace deal may be in the works between Israel and Hezbollah. With that in mind, investors may be less worried about geopolitical risks and have switched to a risk-off sentiment.
The daily chart of the SPDR Gold Shares (GLD) below shows the depth of Monday’s fall in gold prices.
FIGURE 3. DAILY CHART OF SPDR GOLD SHARES ETF (GLD). After bouncing off its November low, GLD looked like it was headed toward its all-time high. Monday’s price action broke that move.Chart source: StockCharts.com. For educational purposes.
It was a surprising reversal. After reaching a high on October 30, GLD dropped 8.30%, bounced and made up for most of that drop. But Monday’s price action gets it closer to the November low. GLD is also trading below its 25-day simple moving average (SMA), which is now starting to trend lower.
Monday was not Bitcoin’s day either. After hitting its psychological 100K level and failing to close there, $BTCUSD declined 4.46%.
FIGURE 4. DAILY CHART OF $BTCUSD. Monday’s steep fall didn’t disrupt the cryptocurrency’s bullish trend. The MACD is turning lower but not enough to warrant a trend reversal.Chart source: StockCharts.com. For educational purposes.
The overall trend is still bullish; if it falls below its 21-day EMA, the sentiment may become bearish.
The Bottom Line
Many big moves on Monday suggested that investors may be less fearful heading into the Thanksgiving holiday. The Cboe Volatility Index ($VIX), often considered the fear gauge, is now below 15, further confirming that investors are complacent.
There are a couple of relevant events taking place this week. Tuesday is the FOMC minutes and, on Wednesday, we get the October personal-consumption expenditures price index (PCE). If either of these are vastly different from expectations, which I doubt, there may be significant shifts in the market.
Keep an eye on your StockCharts Dashboard regularly. If there are any shifts in market dynamics, that’s the first place you’ll see it.
Disclaimer: 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.
Jayanthi Gopalakrishnan is Director of Site Content at StockCharts.com. She spends her time coming up with content strategies, delivering content to educate traders and investors, and finding ways to make technical analysis fun. Jayanthi was Managing Editor at T3 Custom, a content marketing agency for financial brands. Prior to that, she was Managing Editor of Technical Analysis of Stocks & Commodities magazine for 15+ years.
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