14 NOVEMBER 2023
A few weeks ago we said the odds favoured a “Santa rally” that sees equity markets finish the year on a positive note.
The chart below suggests that scenario is starting to play out.
It shows the Nasdaq index breaking out of a multi-month descending channel that saw it fall 12% from its late July peak. The index has now rallied strongly from its October lows.
In recent years, the Nasdaq and crypto markets have tended to witness big trend changes slightly ahead of other risk assets. This was true of their bull market peak in late 2021 which, with the benefit of hindsight, signalled the start of 2022’s pervasive bear market losses. It was also true of the market lows last year.
So the fact both tech stocks and crypto prices are rallying strongly augurs well for other stock markets near-term. The key question is will this remain a narrow rally that sees only a handful of stocks perform well (as has been the case for most of 2023) or will other regions and sectors benefit too?
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