• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Stock Market Hits Record Levels: Prepare for What Inflation Can Bring Next
Stock

Stock Market Hits Record Levels: Prepare for What Inflation Can Bring Next

by November 9, 2024
by November 9, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Another packed week for the stock market has come to a close. The broader stock market indexes broke out of their sideways trading range with the S&P 500 ($SPX), Nasdaq Composite ($COMPQ), and Dow Jones Industrial Average ($INDU) closing the week out at record levels.

The US election results and the Federal Reserve’s decision to cut interest rates by 25 basis points are now in the rearview mirror. When Jerome Powell took the podium on Thursday, he made it clear that the Federal Open Market Committee (FOMC) remains focused on their dual mandate of maximum employment and price stability.

Bond Market Action Is Key

The 10-Year US Treasury Yield Index ($TNX) closed at 4.31% on Friday, which is significantly higher than its September low of 3.61%. Bond prices, which move inversely to yields, fell due to possible economic growth and inflation under the new administration.

The weekly chart of the iShares 20+ Year Treasury Bond ETF (TLT) may be flirting with its 50-week simple moving average (SMA), but it’s trending to the downside. For as long as economic growth, inflation, and a widening budget deficit remains in play, bonds are likely to continue trading at low levels.

CHART 1. WEEKLY CHART OF THE ISHARES 20+ YEAR TREASURY BOND ETF (TLT). Bonds have been struggling of late and is likely to remain low for a while.Chart source: StockCharts.com. For educational purposes.

Volatility in stocks and bonds have also declined. Bond volatility measured by the MOVE Index ($MOVE) which is displayed in the lower panel in the above chart, fell significantly this week. This is an important indicator to monitor, as it can give an early signal of a turn in market action.

The Cboe Volatility Index ($VIX) also fell and closed just below 15 for the week. On Wednesday, the VIX fell over 20%, which shows that going into the elections, there was uncertainty among investors. Once the election results were known, the anxiety dissipated, as seen by the action in the VIX.

With an upward trend in stocks and a low VIX, investors are in a sweet spot. There’s no reason to be bearish now unless some unknown event resurfaces, which is always a possibility. If you’re holding long positions, hang on to them, but when there’s a pullback, use it as an opportunity to add more positions. Or maybe you’ve made enough profits, and you want to sell some of your positions. It all depends on your financial objectives and risk tolerance level.

Small-Cap Stocks Getting Saucy

Small-cap stocks have been interesting this week. After breaking out of a sideways trading range, the S&P 600 Small Cap Index ($SML) had a massive upside breakout (see chart below). The long green candle followed by the two small body days could end up being a Rising Three Methods candlestick pattern. The fourth and fifth days need to form before the pattern is confirmed. So save this chart to your ChartLists and see what happens Monday and Tuesday next week. 

CHART 2. DAILY CHART OF THE S&P 600 SMALL CAP INDEX ($SML). After breaking out of a sideways trading range, $SML had a massive upside move. This move could continue depending on how the daily bars play out in the next two trading days.Chart source: StockCharts.com. For educational purposes.

Market breadth continues to favor a bullish move, with 77% of the $SML stocks trading above their 50-day moving average. The Advance-Decline Percent is relatively stable.

Taking a Cue from the US Dollar

There have been some sharp moves in the US dollar. The US Dollar Index ($USD), which tracks the US dollar against a basket of major currencies, spiked on Wednesday, pulled back on Thursday, and resumed its uptrend on Friday (see the chart below). This move is based on anticipating tariffs, which will strengthen the US dollar.

CHART 3. US DOLLAR INDEX ($USD) SPIKES. The rise in the US Dollar Index is in anticipation of tariffs on imported goods. Monitor it closely for early indications of shifts in stock market action.Chart source: StockCharts.com. For educational purposes.

The US dollar is another chart to monitor closely. Like the $MOVE, $USD can give an early indication of shifts in market action.

Next week, we will receive some key inflation data coming out, although they may not impact the market much. The market has probably already priced in inflation expectations.

If you want to be notified of new articles published in the ChartWatchers blog, sign up on this page.

End-of-Week Wrap-Up

S&P 500 up 4.66% for the week, at 5995.54, Dow Jones Industrial Average up 4.61% for the week at 43,988.99; Nasdaq Composite up 5.74% for the week at 19,286.78$VIX down 31.72% for the week, closing at 14.94Best performing sector for the week: Consumer DiscretionaryWorst performing sector for the week: Consumer StaplesTop 5 Large Cap SCTR stocks: Applovin Corp. (APP); Summit Therapeutics (SMMT); Redditt Inc. (RDDT); Palantir Technologies (PLTR); Ubiquiti, Inc. (UI)

On the Radar Next Week

October Consumer Price Index (CPI)October Producer Price Index (PPI)Powell and other Fed member speechesOctober Retail Sales

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.

You Might Also Like
  • The Stock Market This Week: What This Surging Bull Means
  • DP Trading Room: Bonds & Yields At An Inflection Point
  • DP Trading Room: New Calculation for CPI Could Change Market Direction
  • Week Ahead: NIFTY Drags Resistance Levels Lower; Adopt A Defensive Approach
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Best Way to Capitalize on Election Rally!
next post
Warner Bros. Discovery adds 7.2 million Max subscribers, the streamer’s largest single-quarter jump

You may also like

SP600 (IJR) Silver Cross BUY Signal May Arrive Too Late

January 31, 2025

Stock Market Makes Spectacular Run, and It’s Not From the...

July 12, 2024

How You Can Reduce Risk and Improve Timing When Swing...

April 13, 2023

The US Is Not The Only Stock Market In The...

October 25, 2024

Cruise Line Stocks Just Exploded! Here’s What You Need to...

June 25, 2024

Should We Use Weakness To Accumulate NVDA Before Its Next...

October 22, 2023

Alibaba Returns to the Scene of the Crime

June 8, 2024

What A Week! This Small Cap Party Might Just Be...

December 2, 2023

DP Trading Room: Behind the Scenes: CrowdStrike (CRWD)

July 22, 2024

Equities Remain in Strong “Go” Trend as Tech Returns to...

December 9, 2024

SP600 (IJR) Silver Cross BUY Signal May Arrive Too Late

January 31, 2025

Stock Market Makes Spectacular Run, and It’s Not From the...

July 12, 2024

How You Can Reduce Risk and Improve Timing When Swing...

April 13, 2023

The US Is Not The Only Stock Market In The...

October 25, 2024

Cruise Line Stocks Just Exploded! Here’s What You Need to...

June 25, 2024

Should We Use Weakness To Accumulate NVDA Before Its Next...

October 22, 2023

Alibaba Returns to the Scene of the Crime

June 8, 2024

What A Week! This Small Cap Party Might Just Be...

December 2, 2023

DP Trading Room: Behind the Scenes: CrowdStrike (CRWD)

July 22, 2024

Equities Remain in Strong “Go” Trend as Tech Returns to...

December 9, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Walgreens doubles down on prescription-filling robots to cut costs, free up pharmacists amid turnaround

      May 13, 2025
    • Market Maker Manipulation; Oops, They Did It Again!

      May 13, 2025
    • Fox streaming service to be called Fox One, launch before NFL season

      May 13, 2025
    • Unlock the Power of StockCharts’ NEW Market Summary Dashboard | Walkthrough & Tips

      May 12, 2025
    • Navigating Earnings: Three Stocks, Three Different Stories

      May 12, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,635 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,340 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,324 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,303 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,070)
    • Investing (538)
    • Stock (2,541)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Walgreens doubles down on prescription-filling robots to cut costs, free...

      May 13, 2025
    • Market Maker Manipulation; Oops, They Did It Again!

      May 13, 2025
    • Fox streaming service to be called Fox One, launch before...

      May 13, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,070)
    • Investing (538)
    • Stock (2,541)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    How to Find the Best Stocks...

    April 5, 2023

    Simple Approach to Transform Your Trading

    March 6, 2025

    DP Trading Room: Intermediate-Term View of...

    April 29, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here