We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
As 2024 concludes, US equities are printing fresh highs with no end in sight. Below are three reasons that bulls will continue to win:
Market Breadth is ImprovingEqual weight ETFs
US equity markets are a “market of stocks” rather than a stock market. In other words, a handful of mega-cap stocks can artificially hold up the major market indices, but eventually, lack of participation will come home to roost. The former occured early in 2024 when the stock indices were driven higher by mega-cap tech names like Nvidia ((NVDA - Free Report) ) and Microsoft ((MSFT - Free Report) ). For instance, the market cap-weighted Nasdaq 100 ETF ((QQQ - Free Report) ) is up nearly 28% year-to-date while its equal-weight brother, the Nasdaq 100 Equal Weight ETF ((QQQE - Free Report) ), lags behind and is only up half as much. That said, breadth has improved recently, with QQQE capturing nearly half of its 2024 gains over the past month and hitting fresh highs Monday.
Image Source: Zacks Investment Research
The NYSE new highs/new low indicator is another breadth measure that echoes the market’s improving breadth. Since September, new highs have eclipsed the number of new lows in every trading session except for one.
Image Source: Stockcharts.com
Momentum Begets Momentum
An old Wall Street adage explains, “The trend is your friend.” Historical data sourced from Ryan Detrick of Carson Investment Research suggests that the adage holds weight. When the S&P 500 Index gains more than 20% for two straight years (as it’s about to do), forward returns are robust, and the S&P 500 has gained ground in six of the past eight instances.
Detrick also explains that the recent strength in the small-cap Russell 2000 Index ETF ((IWM - Free Report) ) is another reason for bulls to stay the course.
A Dovish Fed Bodes Well for Stocks
With inflation subsiding, Federal Reserve Chairman Jerome Powell seems intent on providing the market with liquidity. Wall Street is pricing in a ~60% chance of a rate cut when the Fed meeting commences later this month. Remember, markets tend to do well with a “dovish” Fed board.
Bottom Line
Bullish momentum, expanding breadth, and a dovish Federal Reserve board are three reasons for investors to remain bullish stocks into the new year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Reasons the US Equity Bull will Continue
As 2024 concludes, US equities are printing fresh highs with no end in sight. Below are three reasons that bulls will continue to win:
Market Breadth is Improving Equal weight ETFs
US equity markets are a “market of stocks” rather than a stock market. In other words, a handful of mega-cap stocks can artificially hold up the major market indices, but eventually, lack of participation will come home to roost. The former occured early in 2024 when the stock indices were driven higher by mega-cap tech names like Nvidia ((NVDA - Free Report) ) and Microsoft ((MSFT - Free Report) ). For instance, the market cap-weighted Nasdaq 100 ETF ((QQQ - Free Report) ) is up nearly 28% year-to-date while its equal-weight brother, the Nasdaq 100 Equal Weight ETF ((QQQE - Free Report) ), lags behind and is only up half as much. That said, breadth has improved recently, with QQQE capturing nearly half of its 2024 gains over the past month and hitting fresh highs Monday.
Image Source: Zacks Investment Research
The NYSE new highs/new low indicator is another breadth measure that echoes the market’s improving breadth. Since September, new highs have eclipsed the number of new lows in every trading session except for one.
Image Source: Stockcharts.com
Momentum Begets Momentum
An old Wall Street adage explains, “The trend is your friend.” Historical data sourced from Ryan Detrick of Carson Investment Research suggests that the adage holds weight. When the S&P 500 Index gains more than 20% for two straight years (as it’s about to do), forward returns are robust, and the S&P 500 has gained ground in six of the past eight instances.
Detrick also explains that the recent strength in the small-cap Russell 2000 Index ETF ((IWM - Free Report) ) is another reason for bulls to stay the course.
A Dovish Fed Bodes Well for Stocks
With inflation subsiding, Federal Reserve Chairman Jerome Powell seems intent on providing the market with liquidity. Wall Street is pricing in a ~60% chance of a rate cut when the Fed meeting commences later this month. Remember, markets tend to do well with a “dovish” Fed board.
Bottom Line
Bullish momentum, expanding breadth, and a dovish Federal Reserve board are three reasons for investors to remain bullish stocks into the new year.