Strong Start for Major Indices
The year 2024 has kicked off with major indices, except for the Russell 2000 ($IWM), hovering near all-time highs. Investors are carefully observing the potential for some indices to reach double tops, especially when considering monthly charts such as the S&P.
If the 2021 high is surpassed in the coming weeks, even with a modest gain over January, the risk of a double top diminishes. Despite this, substantial profit-taking has not been observed in the markets since the October rally. For instance, keeping an eye on the 50-day MA of the S&P may provide a potential buying opportunity should there be any profit-taking early in 2024.
Comparatively, the Nasdaq has not stretched as far as the S&P, leaving room for pent-up demand if sellers attempt to influence action in this index. While the MACD indicates a ‘sell’, other technical indicators remain robust, and the selling volume is notably lower than recent buying.
Conversely, the Russell 2000 ($IWM) has yet to reach its 2021 highs. However, the end-of-year witnessed a ‘golden cross’ between the 50-day and 200-day MAs, heralding a trend reversal in favor of the bulls, a momentum long achieved for the S&P and Nasdaq. Notably, technical indicators are robust, and selling volume has been limited.
Looking ahead, market participants await the continuation of the October trend, while also keeping an eye on potential profit-taking by ‘weak hands’. Notably, the Russell 2000 ($IWM) stands as the “value” index compared to the S&P and Nasdaq, presenting an avenue for potential buyer attraction, especially upon the return of active traders next week.
