U.S. Stocks Set to Rise by Year-End, but "Correction Likely in Early New Year": Fairlead

On Monday, Fairlead Strategies published an analysis indicating that the S&P 500 (SPX) is currently in a consolidation phase. This pattern arises from a recent decline in short-term upward momentum. Despite the overall market slowing down, the strength observed in mega-cap stocks, excluding NVIDIA (NASDAQ:NVDA), has helped provide some support to the market.

The analysis suggests that major indices will continue to remain attractive to investors through the end of the year. However, there is an expectation of a market correction occurring in the early part of next year.

In the bond market, 10-year Treasury yields are currently testing a critical resistance zone between 4.36% and 4.37%. This resistance consists of a downward trend line and the weekly cloud, a technical analysis indicator.

This weekend's Federal Reserve announcement is viewed as a significant event for yields. Should the 10-year Treasury yields close the week above this resistance level, it would signal a breakout, thereby reversing the cyclical downward trend within a longer-term uptrend.