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Weekly Summary: The S&P 500 is a Click Away from a New All-Time High

The last week of 2023 end on a very positive note. The S&P 500 broad market index already rose by 1.0% to 4793.3 points, the highest since January 5 2022. The index is just 0.5% away from the new all-time record above 4819 points.

Despite the absence of significant macroeconomic data, market sentiment remained buoyant. The Redbook retail sales index in the U.S. showed a slight increase, while unemployment also experienced a modest uptick. However, these data did not significantly affect market expectations. Bets on Federal Reserve interest rates cut in March rose to 72.8% from 71.3% over the week, according to the CME FedWatchTool. This rise is likely more reflective of the momentum from a Santa rally than a response to incoming data.

The next crucial set of macroeconomic data is expected on January 5, with the release of the U.S. labor market report for December. A noticeable slowdown in the American economy has been evident, with an increase in initial jobless claims toward the end of December. However, investors are presently overlooking these indicators.

The S&P 500 index is now in close proximity to its targets at 4850-4950 points, signaling a potential new record. Similarly, the U.S. dollar is nearing the end of its downward correction, with the EURUSD reaching 1.11390, close to the targets at 1.11500-1.12500. These objectives could be attained in the first week of 2024, setting the stage for a possible market turnaround.

Technically, the S&P 500 index is thriving in the territory of new all-time highs after surpassing the resistance zone at 4740-4760 points. Its current trajectory is aimed at the new targets of 4850-4950 points.

In the oil market, Brent crude prices faced challenges. After briefly surpassing the support at $74.00-76.00 per barrel and approaching $80.00 per barrel, prices retraced to $77.00 per barrel. The nearest upside targets are at $84.00-85.00 per barrel. However, the upside period for oil prices is concluding in December, and a decline may be anticipated in January, potentially dropping below $74.00 per barrel to the support at $65 per barrel.

Gold prices are navigating within a mid-term upside formation with targets at $2000-2100 per troy ounce, which have already been achieved. Prices breached the resistance at $2100 per ounce, reaching $2141, before retracing to the nearest support at $2010-2030 per ounce. The fragile recovery is influenced by a weakening Dollar, but a potential technical weakness period until mid-January might lead gold prices to $1800-1850 per ounce. A dip below $2010 per ounce could actualize this scenario.

The Greenback continues its decline, approaching primary correction targets at 1.11500-1.12500 against the Euro. It is advisable to monitor the pair's movement toward these targets before the end of the next week and be alert for potential reversal signals.