Global stocks might post their second straight greater-than-20% gain. The MSCI World Index has climbed 18.0% and the S&P 500 has gained 24.1% year to date. Both indexes are trading near all-time highs, as of late-December.
Some of the chart signals that could have helped you forecast another record-setting year for US stocks include a still-in-place golden cross, a slowing inflation picture, and long-term momentum behind large caps.
Here were some of the biggest chart trends that helped shape the market this year—and might provide clues for what to expect in 2025.
Chart toppers
Among the various data points that bolstered the case for 2024 to be another strong year, 2 chart signals in particular stand out.
Since the April 6, 2023, golden cross (when the 50-day moving average crossed above the 200-day moving average), stocks have rallied roughly 46%. A death cross (when a shorter moving average crosses below a longer moving average) would generate a sell signal to reverse that 2023 golden cross signal. But that hasn't happened in 2024, signaling the bullish momentum remained intact.
While the 50-day exponential moving average remains well above the 200-day exponential moving average, active investors may want to monitor this widely followed crossover signal heading into 2025.
Additionally, the January barometer—which has been accurate multiple years in a row—gave an early positive signal for 2024 after gaining 2% during the first month of the year. Chart users might want to weigh this coming January's market performance to assess whether 2024's momentum spills over into the new year.
Market breadth strengthens
There was some concern earlier in the year that market breadth was not strong enough to sustain the pace of the bull market rally. Essentially, the thinking was that large-cap stocks were representing most of the gains for major indexes and there wasn't as much strength for the rest of the market.
While that remained true to some extent, the advance-decline line—which is a sentiment indicator that takes the cumulative total of stocks advancing less the number of stocks declining—lent support to market breadth strengthening during 2024.
In addition to the market breadth uptrend, another positive signal given by this indicator is that the S&P 500 made multiple higher highs while the indicator also made higher highs. This confirmation is considered a bullish signal.
A trend to keep an eye on is the recent decline in the advance-decline line since early December. A continued decline in this indicator could be evidence that the strength of the rally is weakening.
Large caps lead again
When looking at the stock market by market cap, momentum appears to have played a role. For the fifth straight year, large-cap stocks are on pace to potentially outperform both mid-cap and small-cap stocks.
Once again, large caps have been led by big tech—including members of the "Magnificent 7"—that helped drive the large-cap outperformance. Rate cuts and artificial intelligence exuberance helped sustain the prior-year's momentum for many mega-cap tech and communication services companies.
Will large caps once again lead next year? It's important to remember that performance by market cap can vary significantly as economic cycles change, along with other factors. Typically, large-cap stocks outperform when investors are looking for less-variable earnings and revenue streams. Relatively smaller-cap stocks may outperform during phases of the business cycle when economic growth is accelerating.
While large caps have far outpaced other market caps recently, mid-cap and small-cap stocks have outperformed large caps over the past 30 years. Moreover, the multiyear rally for large-cap stocks in recent years has made them relatively more expensive versus other market caps. With that said, the momentum is clearly behind large caps.
Inflation slows, rates fall
From an economic data perspective, prices for goods have dominated investors' attention for 3 straight years. The 2022 inflation spike played an integral role in that year's bear market for stocks. The pace of growth came down substantially in 2023, helping stocks bounce back last year, and that trend continued in 2024 (although prices have continued to see positive growth).
That trend, along with the Federal Reserve cutting rates multiple times in 2024 (including the quarter-point rate cut on December 18), helped prime the big rally for stocks—especially cyclicals. The US central bank has telegraphed more rate cuts may be forthcoming next year, but that the pace may slow compared with that of 2024. Looking to 2025, trends for both interest rates and inflation data are likely to remain a critical factor for stocks.
2025 chart trends
2024 was another year for the record books. The S&P 500 surpassed 6,000 and the Dow shot past 40,000 for the first time ever. Gold prices soared above $2,700 per troy ounce. Bitcoin topped $100,000. What trends will dominate 2025? Keep an eye on the charts for clues to help best position yourself.