The stock market experienced a whipsaw action over the past two weeks, with investors looking to reassess their positions. Following the election results, the bullish sentiment rose to 49.8% from 41.5%, while the neutral camp dropped to 21.8%. The bearish percentage also saw a slight increase.
As proposed cabinet members were announced and plans for 2025 began to unfold, investors turned fearful, leading to selling on Friday. Tech shares suffered the most, with six widely followed tech stocks losing $458 billion. However, this week’s numbers will be crucial in determining the market’s direction.
Analysts are scaling back their forecasts for earning growth over the next year, citing “earning-revision-momentum” that has slumped to negative territory. Despite this, hard data from last week’s trading showed 803 advancing issues and 2066 declining on the NYSE.
Technical analysts warn of potential support levels at $563 and July highs. The S&P 500 Advance/Decline line failed to make a new high on November 11th, creating a negative divergence. Meanwhile, the NYSE All A/D line shows a similar negative divergence, favoring further weakness.
Investors should consider using stops under the most recent low if the market moves higher early in the week, as last week’s selling may lead to further declines. The extent of the current decline will depend on the bond market, which will be discussed in a separate article this week.
The market’s reaction to previous events, such as the Brexit referendum in June 2023, shows that panic selling often yields to buying in the long run. As investors reassess their positions, they may start to consider buying, but it is essential to monitor warning signs and adjust trading strategies accordingly.
Source: https://www.forbes.com/sites/tomaspray/2024/11/17/is-the-trump-rally-out-of-gas