SPX Spotlight - Monday, Dec 30, 2024: Year-End Slide
What will the market serve us on the last trading day of the year 2024?
Introduction
The S&P 500 (SPX) tumbled on the penultimate trading day of 2024, closing down 1.1% as investors took profits and reassessed positions heading into the new year. Despite the day's losses, the index remains on track for an impressive annual gain of over 23%.
Market Drivers and Economic Reports
The S&P 500's decline on December 30, 2024, occurred in the absence of major economic reports, suggesting that market sentiment and year-end dynamics played a significant role.
Key factors influencing the market included:
Year-end profit-taking: Investors appeared to be cashing in on gains from a strong 2024, with the S&P 500 up 23.8% for the year despite the day's losses.
Portfolio rebalancing: As the year concludes, many institutional investors are likely adjusting their portfolios, which can lead to increased selling pressure.
Interest rate concerns: Rising interest rates at year-end contributed to market weakness, potentially impacting future borrowing costs and economic growth prospects.
Santa Claus rally disappointment: The much-anticipated year-end rally has failed to materialize so far, with the S&P 500 down slightly during the traditional seven-day period.
While no major economic reports were released on December 30, investors were keeping an eye on upcoming data, including:
MNI Chicago PMI for December
Pending home sales for November
Dallas Fed manufacturing activity for December
Several key stocks influenced the market's direction:
Big Tech decline: Major technology companies like Apple and Microsoft experienced significant losses, weighing heavily on the overall market.
Boeing: The aerospace giant saw its stock fall following a tragic incident where one of its jets skidded off a runway in South Korea, resulting in numerous fatalities.
Natural gas companies: In contrast to the broader market, natural gas-related firms saw gains, with EQT Corp. jumping 5.1% as natural gas futures surged more than 15%.
Technical Analysis
Bull Case
We have key resistance levels at 5,942 and 5,980. Since we are sitting at a pivotal level, we could see the market push and close green on last trading day of 2024.
Bear Case
We have a strong support at 5,870 and a support from trendline as well. However, we could be the market test these levels before turning around to close the day green.
Market Sentiment and Key Indicators
For the markets to close strong, VIX needs to break the lower trendline.
We could also see VIX retesting the trendline making higher low and shooting upwards. This could lead to observing market selloff for the last day of 2024.
Key Takeaways & What’s Next
As we head into the final trading session of 2024, watch for the SPX to find support around the 5,870-5,850 level. A bounce from this area could signal resilience, while a break below might indicate further weakness ahead. The market will be closed on Wednesday for New Year's Day, potentially leading to lower trading volumes and increased volatility on Tuesday
Closing Thoughts
Despite today's setback, the S&P 500 is still on track for its second consecutive year with gains exceeding 20%.
Will this late-year pullback continue into 2025, or is it merely a brief pause before another leg up? Share your thoughts and predictions for the start of 2025 in the comments!