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S&P 500 melt-up

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· Fed’s potential rate cuts, boost sentiment

· Possible market correction, despite strong rally

The S&P 500 is flying in November

The recent stock market rally in November has led to a significant shift in investor behavior, with many discarding cautious approaches. The S&P 500 has seen remarkable growth of nearly 10% this month alone.

This change in sentiment is primarily fueled by the belief that the Federal Reserve will halt interest rate hikes and potentially reduce rates in 2024.

That has led to investors piling into stocks at the fastest pace in nearly two years as market participants are betting on a soft-landing scenario.

On top of that, there are the prospects of lower bond yields, above-consensus economic growth, and a possible end of the earnings recession, as the US economy has shown incredible resilience despite the dramatic rate hikes and contracting money supply by the Fed.

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Source: Bloomberg

Federal Reserve’s aggressive interest rate hikes have seemingly had limited impact on the U.S. economy, which continues to display impressive robustness.

The rally experienced some tailwinds thanks to oil prices retreating and VIX dropping to a handle of 12, the lowest since January 2020.

WTI has been down 17% since the start of October, and OPEC+ members, for now, disagree on supply cuts, which will undoubtedly help the Fed’s ongoing fight against inflation.

Peak Fed Hikes

Recent Federal Reserve minutes indicate a cautious approach toward future interest rate decisions, aiming to bring inflation down to their 2% target.

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Source: CNBC

Nonetheless, US Equity markets historically perform strongly after the end of the hiking cycle.

The S&P 500 and Nasdaq return on an average of 14.5% and 13.4%, respectively, 12 months after the last rate hike.

If history is any guide, both large cap and small indices have some upside potential.

However, elevated greed and high market exposure have preceded turning points for the markets.

The NAAIM exposure index, used to gauge the sentiment and positioning of active investment managers in the U.S. stock market, is once again stretched.

CNN’s “fear and greed index” has more than tripled in a month, shifting from fear to greed.

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Source: TradingView

Can the rally continue?

The recent rally might face some correction, as investors are chasing higher returns, which might have contributed to a FOMO rally.

A pullback scenario is entirely possible and even healthy, given how strong and long the recent rally has been in recent weeks.

That is not to say that the market does not have the legs to go higher, but a mild correction and possibly a Christmas rally might be a more plausible continuation for the S&P 500.

Investors can long the S&P 500, NASDAQ using our 3x US 500 , 5x US 500 ,

Alternatively, they can short the S&P 500 and the NASDAQ using our -3x US 500 ,

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Violeta Todorova

Senior Research

Violeta è entrata a far parte di Leverage Shares nel settembre 2022. È responsabile dello svolgimento di analisi tecniche e ricerche macroeconomiche ed azionarie, fornendo pregiate informazioni per aiutare a definire le strategie di investimento per i clienti.

Prima di cominciare con LS, Violeta ha lavorato presso diverse società di investimento di alto profilo in Australia, come Tollhurst e Morgans Financial, dove ha trascorso gli ultimi 12 anni della sua carriera.

Violeta è un tecnico di mercato certificato dall’Australian Technical Analysts Association e ha conseguito un diploma post-laurea in finanza applicata e investimenti presso Kaplan Professional (FINSIA), Australia, dove è stata docente per diversi anni.

Julian Manoilov

Marketing Lead

Julian è entrato a far parte di Leverage Shares nel 2018 come parte della prima espansione della società in Europa orientale. È responsabile della progettazione di strategie di marketing e della promozione della notorietà del marchio.

Oktay Kavrak

Head of Communications and Strategy

Oktay è entrato a far parte di Leverage Shares alla fine del 2019. È responsabile della crescita aziendale, mantenendo relazioni chiave e sviluppando attività di vendita nei mercati di lingua inglese.

È entrato in LS da UniCredit, dove è stato responsabile delle relazioni aziendali per le multinazionali. La sua precedente esperienza è in finanza aziendale e amministrazione di fondi in società come IBM Bulgaria e DeGiro / FundShare.

Oktay ha conseguito una laurea in Finanza e contabilità ed un certificato post-laurea in Imprenditoria presso il Babson College. Ha ottenuto anche la certificazione CFA.

Sandeep Rao

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Sandeep è entrato a far parte di Leverage Shares nel settembre 2020. È responsabile della ricerca sulle linee di prodotto esistenti e nuove, su asset class e strategie, con particolare riguardo all’analisi degli eventi attuali ed i loro sviluppi. Sandeep ha una lunga esperienza nei mercati finanziari. Iniziata in un hedge fund di Chicago come ingegnere finanziario, la sua carriera è proseguita in numerose società ed organizzazioni, nel corso di 8 anni – da Barclays (Capital’s Prime Services Division) al più recente Index Research Team di Nasdaq. Sandeep detiene un M.S. in Finanza ed un MBA all’Illinois Institute of Technology di Chicago.

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