Market Update 11/24/23

The November uptrend continued. All eleven S&P SPDR sectors were higher last week. Health Care (XLV) and Consumer Staples (XLP) were the best sectors, while Utilities (XLU) and Energy (XLE) rose but were weaker than the other sectors. The SPDR S&P 500 ETF Trust (SPY) gained +1.00%.

S&P SPDR Sector ETFs Performance Summary 11/17/23-11/24/23

112423 SPDR Sectors

Source: Stockcharts.com

 Figure 2: Bonnie’s ETFs Watch List Performance Summary 11/17/23-11/24/23

112423 Week ETFs

Source: Stockcharts.com

Transportation and Global equities rose. Biotechnology stocks gained strength, while Semiconductor stocks, which have been leaders of the advance, weakened.

Figure 3: CBOE Volatility Index VIX

112423 VIX Daily

Source: Stockcharts.com

The CBOE Volatility Index (VIX), a measure of fear, traded above 20.00 for most of 2022, with a high at 36.95 on 3/7 (blue circle), which did not get violated in 2023.

VIX continued its downward trend, closing at 12.46 (purple circle) last week, its lowest close since January 2020.

If the VIX remains below 16, intraday volatility is likely to be limited.

Figure 4: UST 10YR Bond Yields Daily

112423 UST 10 Yr Bond Yields Daily

Source: Stockcharts.com

The 10-year U.S. Treasury yields rose slightly last week, closing at 4.447% below the May uptrend (pink line)

Support is at 3.90%. Falling yields will continue to be short-term positive for equities.

The major market averages continued to climb, with the Dow gaining +1.27%, the S&P 500 +1.00%, and the Nasdaq up +0.89%. The Russell 2000 Index lagged the other averages but gained +0.54%.

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Figure 5: Value Line Arithmetic Average

1112423 VLE Daily

Source: Stockcharts.com

The Value Line Arithmetic Index ($VLE) is a mix of approximately 1700 stocks. VLE broke the October 2022 uptrend in early March 2023 (blue line), and April, May, and June successfully tested the March low and ultimately made a new low in October 2023.

The daily trend of VLE remains up.

VLE closed higher last week, at 9145.03, up 0.79%, above the 50-day MA (blue rectangle) and the 200-day MA (red rectangle), a sign of underlying strength.

Support is 8900, 8800, and 8600. Resistance is at 9200 and 9500.

It is bullish that VLE is above the uptrend line, where VLE broke down (purple line) with a rising double-bottom pattern. However, its disturbing VLE stalled, closing below 9200 resistance.

Strength in VLE early this week would imply a continuation of the rally, potentially testing September’s high, followed by a test of the August highs if VLE penetrates resistance.

On the other hand, if VLE stalls now and closes below 8900, this would imply caution that a short-term pullback may begin.

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Market breadth remains positive.

Weekly market breadth was positive on the New York Stock Exchange Index (NYSE) and for the Nasdaq. The NYSE had 1790 advances and 1178 declines, with 176 new highs and 58 new lows. There were 2705 advances and 1915 declines on the Nasdaq, with 248 new highs and 313 new lows.

Continued expansion in market breadth on the NYSE and Nasdaq is necessary for the latest rally to continue over the next several weeks.

If you want to go more in-depth with charts, I invite you to join my FB group, Wealth Through Market Charts.

Figure 6: Nasdaq Advance Decline Line Daily (Top) and Nasdaq (Bottom)

112423 Daily Nasdaq Cumulative Advance-Decline Line

Source: Stockcharts.com

The top chart is the Nasdaq Daily Advance-Decline Line, a technical indicator that plots the difference between the number of advancing and declining stocks. In January 2023, the October 2022 downtrend was broken (solid green line) but quickly reversed lower in February 2023, when most of the stock participation was the large Mega Cap Stocks.

The AD-Line (top chart) broke support (purple circle) in August and continued making new lows in October (red arrow). It is positive a favorable rising double formation has formed, combined with a break of the August downtrend (blue circle).

It is positive Nasdaq (lower chart) broke the July downtrend (green line). However, it is disturbing that the index remains below the uptrend (purple line), which broke down in September and now acts as resistance.

If market breadth continues improving, the Nasdaq is likely to continue to rise. On the other hand, if market breadth weakens, the rally will likely stall sooner than later.

 Figure 7: Daily New York Stock Exchange (NYSE) New Lows

112423 NYSE New Lows Daily

Source: Stockcharts.com

Watching New Lows on the New York Stock Exchange is a simple technical tool that helps awareness of the immediate trend’s direction. New lows warned of a potential sharp pullback, high volatility, and “panic selling” for most of 2022, closing above 150. The peak reading was 9/23/22 when New Lows made a new high of 1106 (pink circle), and New Lows expanded to their highest level in 2023 on 3/13/23 (red circle) to 335.

New Lows increased in September (red arrow on the right) toward the high-risk zone greater than 150, peaking at 443 on 10/3, the highest reading since October 2022.

New lows had stopped accelerating in early October. However, the decline was not complete until the end of the month as New Lows made only a slight new high, peaking at 454 (red circle) on 10/23.

New lows on the NYSE closed at 6 (pink circle) last week, in the lowest risk zone below 25. It would remain positive and imply low risk if New Lows stay between 25 and 50.

On the other hand, an increase above 150 would be a warning sign of a market correction.

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Figure 8: Daily iShares Russell 2000 (IWM) Price (Top) and 12-26-9 MACD (Middle and Money Flow (Bottom)

112423 IWM Daily

Source: Stockcharts.com

The top chart is the daily iShares Russell 2000 Index ETF (IWM), the benchmark for small-cap stocks, with a 50-Day Moving Average (MA) (blue line) and 200-Day Moving Average (MA) (red line) that traders watch and use to define trends.

IWM, in an uptrend, closed at 179.33, up +0.58%, but lagged the S&P 500 last week, which rose 1.00%. IWM closed above the 50-day MA but was not strong enough to close above the 200-day MA (blue rectangle).

Support remains at 176.00, 170.00, 166.00, and 161.00. Resistance is at 182.00, 188.00, and 194.00.

MACD (middle chart) remains on a buy, above 0, and after a few whipsaws, has shown strength since breaking the August downtrend.

Money Flow (lower chart), after hitting its highest level since July, is falling now, warning that the rally may stall.

Keep an eye on the Russell 2000 (IWM) for a clue for this week’s direction. If IWM strengthens, showing leadership and stronger than the S&P 500, it would be positive, or if IWM lags, which would be a clue that a consolidation or a short-term decline may begin.

Figure 9: Daily Semiconductors (SMH) (Top) and 12-26-9 MACD (Middle) and Money Flow (Bottom)

112423 SMH Daily

Source: Stockcharts.com

The top chart shows the Daily Semiconductors (SMH) ETF, concentrated mainly in US-based Mega-Cap Semiconductors companies. SMH tends to be a lead indicator for the market when investors are willing to take on increased risk and the opposite when the market is falling.

The Semiconductor ETF (SMH) rally stalled after three weeks of solid gains, down        -0.50%, closing at 161.76.

Support remains at 155.00, 150.00, 140.00, and 135.00. Resistance is at 165.00. Short-term objective remains185.00.

MACD (middle chart) is on a buy, flattening after reaching its highest MACD reading since August.

Money Flow (lower chart), after reaching the highest level in 2023, is now falling, implying increased risk for Semiconductors in the near term.

Figure 10: Daily Invesco QQQ Trust (QQQ) Price (Top) and 12-26-9 MACD (Bottom)

112423 QQQ Daily

Source: Stockcharts.com

The chart shows the daily Invesco QQQ, an exchange-traded fund based on the Nasdaq 100 Index. QQQ made a low in October 2022 (red circle), followed by a successful retest of the low in early January 2023 and the start of an uptrend.

QQQ broke the July downtrend (green line) and continued sharply higher.

Last week the Nasdaq 100 (QQQ) gained +0.90%, closing at 389.51. QQQ remains above the 50-day Moving Average (blue rectangle) and the 200-day Moving Average (red rectangle), a sign of underlying strength.

Support is 380.00, 376.00, 365.00, and 350.00, with resistance at 390.00.

The bottom chart, MACD (12, 26, 9), remains on a buy, above 0, with the upside momentum slowing after reaching its highest reading since July.

It is bullish that the gap (pink circle) remains, not filled from the previous week. However, with MACD momentum slowing and resistance slightly above, after significant gains in November, be alert to profit-taking if the rally stalls on Monday, which has tended to be an up day in 2023.

Figure 11: The S&P 500 Index (SPY) Daily (Top) and 12-26-9 MACD (Bottom)

112423 SPY Daily

Source: Stockcharts.com

The S&P 500 (SPY) had a false breakdown (blue circle) in October after being in an uptrend (purple line). Two downtrends were in effect and broken to the upside in September (green dotted line) and August (green solid line).

The daily trend is up. SPY continued higher, closing at 455.30, up +1.00% for the week, remaining above the 50-day Moving Average (blue rectangle) and the 200-day Moving Average (red rectangle), a sign of strength.

Support is at 445.00, 440.00, 433.00, 425.00, and 405.00. SPY closed slightly above 455.00 resistance (purple horizontal line).

MACD (bottom chart) remains on a buy above 0 and rising

A higher objective for the SPY will be given to potentially 485.00 if the SPY closes above 460.00 for two consecutive days and remains above last week’s low of 450.52.

Figure 12: S&P 500 Bullish Percent Index

112423 SPY Bullish Percentage Index Daily

Source: Stockcharts.com

The Bullish Percent Index (BPI), developed by Abe Cohen in the 1950s, is a breadth indicator based on the number of stocks based on Point and Figure Buy signals. The indicator helps you know the market’s health and when it’s overbought or oversold.

When the bullish percent index is above 70%, the market is overbought, and when the indicator is below 30%, the market is oversold. Like other overbought indicators, sometimes it does not get as high or as low.

In 2022 and 2023, the indicator reached 70 (overbought) six times (red circles). All occurrences were near market peaks (red lines). The BPI closed at 63 (purple circle), getting closer to achieving the 70 level if there is continued strength in the SPY. A reading over 70, followed by a retracement below 70, would give a sell signal on this indicator.

For now, BPI is rising and on a buy. Time will tell if it has the strength to get above 70 or if it will turn lower before getting overbought.

Summing Up:

The trend is up, with the major market averages continuing to climb in November, a strong seasonal period, with the Nasdaq and S&P 500 up for the fourth consecutive week. Semiconductors (SMH), which have led the market higher, did not participate in the rally last week, while the Russell 2000 (IWM) underperformed the S&P 500 (SPY). Daily momentum has begun to slow. Be alert for a short-term pullback or a consolidation of the November rise if unexpected news or the major averages stop rising and profit-taking begins.

Remember to manage your risk, and your wealth will grow.

Let’s talk investing. You are invited to set up your Free 30-minute Wealth and Well-Being Strategy session by clicking here or emailing me at Bonnie@BonnieGortler.com. I would love to schedule a call and connect with you.

Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results.

Bonnie S. Gortler

Bonnie Gortler, Consultant, Coach, and Author specializing in Wealth and Well-Being, is a successful stock market expert who has been instrumental in managing multi-million-dollar client portfolios within a top-rated investment firm during her over 35-year corporate career. As the author of “Journey to Wealth,” Bonnie has made it her mission to share the importance of risk management and how to enjoy real financial well-being by applying the technical and mental sides of investing. Bonnie has an M.B.A. and is a certified life coach. It is through her love of coaching, consulting, blogging, and social media that she creates change in the lives of many and inspires people from around the world. Bonnie is fully committed to your personal growth and development as she shares her winning spirit and powerful techniques with you. Visit BonnieGortler.com to gain tips and insights about investing, personal development, and inspiration through her articles on Wealth and Well-Being.
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