Chart of the Day – US500 (12/30/2024)

We are entering the last week of vacation on the markets. During this period, we can expect reduced market liquidity and lower volatility. However, on the main US500 stock index, we see an interesting technical structure that could signal a short-term correction. This scenario also appears to be supported by the seasonality associated with the end of the calendar year.
Analysis of the behavior of the index over the last 10 years indicates that the last days of the year, as well as the first days of the following year, were often marked by a tendency to take profits. These are the last days of the year and the first three days of the new year.

On the chart above, a vertical line marks the last day of trading on the American stock exchange. Around this date, we clearly observe a weakening of the SP500 index.

The stock’s weakness can be attributed to several factors:

L’optimization of tax losses – the realization of capital losses before the end of the calendar year to offset gains and reduce taxable income.
Portfolio rebalancing and window dressing » – investment funds and institutional investors often adjust their portfolios before finalizing year-end reports.
Decline in liquidity and holiday season – trading volumes generally decrease during the holiday season as many market participants take time off.

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