S&P 500 Looks Well Positioned for Year-End Rally

Core Viewpoint - The market is currently cautious as the SPX approaches potential resistance levels, with a 25-basis point rate cut already factored in by investors [1][3]. Market Performance - The SPX closed at 6,827.41, marking a historically weak seasonal period for the index, with the first half of December averaging a -0.07% return over the past 50 years [2]. - Notable winners in the market included silver, gold, industrials, and financials, while technology stocks, particularly Oracle and Broadcom, experienced declines due to poor earnings reactions [1]. Seasonal Trends - Historically, the second half of December is the strongest period for the SPX, averaging a 1.30% increase, with positive returns occurring about 75% of the time [4]. - If the SPX closes at 6,764.00 or higher, it is likely to see a continuation of this trend, with an average return of 1.86% into the end of the year [4]. Investor Sentiment - There is a significant short interest in SPX components, which could provide future buying power and support during pullbacks [10][13]. - Active investment managers are currently fully invested, which may limit their ability to provide support in the near term [10][16]. Resistance Levels - The SPX must break through established resistance around the 6,900 mark to trigger major short covering and facilitate a rally [14]. - The market has struggled to regain momentum since closing below the bottom rail of a bull channel in mid-November [6][16].