US Stocks End Week on a Strong Note


A combination of factors pushed U.S. (and global) stocks sharply higher during the second half of the week. One big factor was the Wednesday Fed statement that it would be "patient" in raising rates next year. Another was a bounce in a very oversold oil market late in the week which gave a big boost to energy shares (which make up 8% of the S&P 500). Energy shares rose 9.5% and were by far the week's strongest sector. Material stocks (led by copper and aluminum) came in second with a weekly gain of nearly 5%. All other sectors gained on the week as well. Chart 1 shows the S&P 500 rallying sharply and nearing a test of its December high. Small caps also had a strong week. Chart 2 shows the Russell 2000 Small Cap Index breaking out to a new six month high. I wrote on Thursday that small caps usually start to do better in mid-December in anticipation of the traditional January Effect. Traders were also buying in anticipation of the traditional yearend Santa Claus rally. [Friday's unusually heavy trading was due mainly to the quarterly expiration of futures and options]. Foreign shares also jumped.

John Murphy
About the author: is the Chief Technical Analyst at, a renowned author in the investment field and a former technical analyst for CNBC, and is considered the father of inter-market technical analysis. With over 40 years of market experience, he is the author of numerous popular works including “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Before joining StockCharts, John was the technical analyst for CNBC-TV for seven years on the popular show Tech Talk, and has authored three best-selling books on the subject: Technical Analysis of the Financial Markets, Trading with Intermarket Analysis and The Visual Investor. Learn More
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