Is the Stock Market Gearing Up for a Santa Claus Rally?
A new week has kicked off with Thanksgiving on the horizon, and commodities continue to lose ground as liquidity has moved into equities and bonds in hopes of a Santa Claus rally.
The S&P 500 has again violated the two downward trend lines created since 2020 relative to the Commodity index, signaling a potential and final reversal.
This is undoubtedly very positive for stocks, but we will have to wait for the ratio to break above the June 2023 highs and recover the February 2020 highs at $160.
Stocks could consolidate outperformance against commodities and record new highs. The S&P 500 last touched a new all-time high on Jan. 3, 2022, and has since spent 473 days below it.
Although it might seem like a tough climb to those heights to many, it is slowly inching up to those levels.
Speaking of all-time highs, the market is now within 2% of the new annual high, this is to point out how strong the last few weeks have been, and within 6%.
from the January 2022 all-time high at 4800 points. The top performer remains Nvidia (NASDAQ:NVDA) with +240% gained since the beginning of the year, recording +20% in the last month.
This coincides with the largest inflow of cash to U.S. large-caps since February 2022 and the increasing share that the top 7 companies in the S&P500 continue to have, although this situation is also raising some concern about index diversification (if these selloffs and underperforms could undermine market stability)
We see how from March 2020 to November 2021 the stock market was driven upward by High-beta sectors, outperforming Low-beta sectors.
From April 2022 to December things changed, Low Beta stocks prevailed and then changed the trend again in favor of High Beta, hitting highs in July 2023, taking
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