2023's biggest chart trends | Technical analysis | Fidelity (2024)

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Key takeaways A bullish picture Interest rates grab headlines while oil boosts stocks Big tech bolsters large caps Charting 2024 Choose the criteria. See stocks that match. More to explore 5-step trading guide Technical indicator guide Looking for more ideas and insights? Thanks for subscribing! We're on our way, but not quite there yet Oh, hello again! Thanks for subscribing to Looking for more ideas and insights? You might like these too: Fidelity Viewpoints® Decode Crypto Fidelity Smart Money℠ Active Investor Insights from Fidelity Wealth Management ℠ Women Talk Money Educational Webinars and Events

A golden cross, a bullish January barometer, mega caps outperforming, and more.

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2023's biggest chart trends | Technical analysis | Fidelity (1)

Key takeaways

  • Stocks painted a bullish picture in 2023.
  • Several indicators presaged this year's rally.
  • Some charts may be hinting that 2024 could be a year of caution.

Some major chart signals may have helped you forecast that US stocks would rally in 2023—if not reach new record highs. Here are some of the biggest chart trends that helped shape the market this year—and might provide clues for what to expect in 2024.

A bullish picture

Global stocks plunged last year, but the market’s trend has been strongly positive in 2023. The MSCI World Index is up 20.5% and the S&P 500 has gained 24.1% year to date.

It was reasonable to expect a bounce-back year for stocks: Markets have a historical proclivity to rally after a year when they decline. Moreover, 2 chart signals in particular may have provided additional cause for bullishness.

The January barometer—which notably has been accurate multiple years in a row—gave a positive signal for 2023. Then, after flirting with a crossover signal in February, a golden cross appeared in the charts in the spring. A golden cross is a bullish moving average crossover signal that occurs when a shorter moving average crosses above a longer moving average. Since the April 6 golden cross, the S&P has gained more than 15% (see S&P 500 makes a golden crosschart). The rally has erased almost all of 2022’s losses and has pushed US stocks back near new all-time highs.

2023's biggest chart trends | Technical analysis | Fidelity (2)

Source: Active Trader Pro, as of December 20, 2023.

Looking ahead, chart users might strongly weigh this coming January’s market performance—given that the January barometer technical indicator has been reliable in recent years—as well as keep an eye out for future moving average crossover signals that could hint at a trend reversal.

Interest rates grab headlines while oil boosts stocks

Much like last year, interest rates and prices for goods dominated investors' attention in 2023. Slowing inflation growth helped investors look past rising rates throughout the year.

In particular, falling oil and gas prices played a major role in boosting stocks. A chart of oil prices and the S&P 500 shows that, once oil receded well below $100 a barrel, stocks began their rebound (see Stocks rallied as oil prices fellchart).

Gas prices, which can greatly impact consumer spending, are down roughly 7% thus far in 2023 and are down more than 20% from the 2022 peak. But energy prices, which are always a key factor to watch, can swing in either direction at any time.

Meanwhile, many investors expect rates may move lower next year, but Federal Reserve officials have not signaled that multiple rate cuts are assured in 2024. Whereas widespread expectations heading into 2023 were for rates to rise, the forecast for rates in 2024 might not be as certain.

Big tech bolsters large caps

For the fourth straight year, large-cap stocks—and mega caps in particular this year—are on pace to outperform both mid-cap and small-cap stocks (see In 2023, the bigger the better chart).

2023's biggest chart trends | Technical analysis | Fidelity (4)

Source: FactSet, as of December 20, 2023.

This year, big tech’s resurgence—including the FAANG stocks—was a primary driver of mega-cap outperformance. After tech and communication services were among the worst-performing sectors in 2022 (losing 29% and 41%, respectively), they have rebounded in a massive way in 2023. Significant cost cutting, exuberance about artificial intelligence, and expectations that interest rates might peak all helped bolster many mega-cap tech and communication services companies.

Will large caps once again lead in 2024? It’s important to remember that performance variation 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, medium-cap and small-cap stocks have outperformed large caps over the past 25 years. The big rally for large-cap stocks in recent years has made them relatively more expensive versus other market caps, which may bode well for investors that are interested in rotating, to some extent, to medium- or small-cap stocks. With that said, Fidelity’s Asset Allocation team has placed the US and most other developed economies in the late stage of the business cycle—which tends to favor larger, more stable investments.

Charting 2024

2023 was a year for the record books. The Dow surpassed 37,000 for the first time ever (is Dow 40,000 on the horizon?). Gold prices shot past (and finally held above) $2,000. US home prices are at record highs. There’s no shortage of market factors for investors to stay on top of going into the new year. Keep an eye on the charts for clues to help best position yourself.

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