Is the year-end rally now a done deal?

Last Updated: 8. November 2023By

The stock market has been somewhat tricky lately. Positively, a number of sentiment indicators are in areas that have historically been seen as contrary indicators for further corrections.

The same applies to the positioning of relevant investor groups.

Good for your stocks: sentiment, positioning and seasonality At present, wealth managers (generally, long-term oriented large investors) are heavily long (betting on rising prices) on the US stock market.

On the other hand, hedge funds (large active traders) are heavily short (betting on falling prices). These hedge funds are so short that it can also be seen as a contrary indicator for further relevant price declines.

In addition, the probability of a year-end rally increases statistically at the end of the year. Even if this comes much later than usual in US election years.

From these sides we are thus looking at a very good starting point for a year-end rally.

Dow Jones: Short (?) Trip into bear country What I did not like so much lately was the chart technique. The Dow Jones already fell below its trend-leading 200-day line in September. The S&P 500 followed this index downward.

But here the situation has brightened up again. Even the weak Dow was able to recapture its 200-day line and is thus formally back in an uptrend.

Dow Jones Industrial Average daily chart: back in the bull market!


It was precisely the speculative technology index Nasdaq 100, however, that was always in the bull camp.

The US stock market seemed to me to be playing the fear lately that interest rates have been raised too far and a recession is looming.

I think this is nonsense. For the reason that the USA recently reported an amazing +4.9% growth in the third quarter on an annualized basis. From this level, even in the event of a strong downturn, it would take at least one full year to a recession.

Is the year-end rally now a done deal? Maybe. In the coming weeks, it will be crucial whether the US stock market really manages to curve towards the year-end rally or not.

In my opinion, the probability of this is very high. But it all comes down to the selection of the right stocks.

US benchmark with the best chances for you right now Here I clearly favor the US benchmark. Because of the strong seasonal tailwind and the rising US corporate profits, the current situation is very favorable for you if you invest in US stocks.

Incidentally, my stock service is specialized in this market and we have many highly promising values in our sample portfolios that have also performed excellently during the slightly difficult weeks recently. Several values even achieved new all-time highs!