Daryl Guppy: Can November’s market rally last?

The trajectory of gold and silver prices suggests that not everyone is spellbound by the rise

Source: The Business Times

By Daryl Guppy

Update: Dec 2nd, 2025, 2:54 PM

SANTA arrived early in November, swooping down in his sleigh to halt the market fall. Markets generally did not fall to their next support levels. Instead, they developed a relatively small pullback, followed by a Santa sleigh rescue that lifted them in new rallies.

The existence of Santa is a vexing question that dances around the delights in unexpected presents and the harsh reality that Santa might not be real. In my family, we do not necessarily want our seven-year-old blurting out the truth to his three-year-old sister.

That’s also a dilemma that sits uncomfortably in the market.

Santa’s gift of a Christmas rally is too good to ignore. It rescued and rewarded those who took no action to cut losses as the market fell. It has rewarded those who have suspended their disbelief in the face of increased inflation, low growth and the civil unrest that plagues the US.

Santa has nine reindeer, but the US has the Magnificent Seven leaders in artificial intelligence. What can possibly go wrong with the S&P 500? Those who are like our three-year-old who believes in Santa and his sleigh may remain confident?

But others, like our seven-year-old, are less convinced and are stockpiling gifts against a coming reckoning. The trajectory of gold and silver prices suggests that not everyone is spellbound by market rally. If things are so good, as suggested by the rise in the S&P 500, then there is no need to hedge against the future with gold.

We start with the S&P 500 Santa rally to see if we can determine when it might be time to look the proverbial gift horse in the mouth. Just as it was last month, there is no indication of change in trend behaviour, although the November stumble is the first indication of a weakening in the trend.

This is shown by the way the long-term group of averages in the Guppy Multiple Moving Average (GMMA) indicator compressed in reaction to the pullback. It shows some investors also became sellers. In previous pullbacks, the group of averages remained well separated, showing investors coming into the market as buyers.

Despite the steady prolonged rise in the S&P 500, the trend behaviour and upside targets are calculated with reference to well established trading bands. The three lines shown on the chart extract are extrapolations from a series of lower trading bands.

These trade band projections do not always provide precisely accurate support and resistance levels. They are used as a guide to where the market may pause, consolidate and then make its next move.

The S&P 500 has consolidated around the 6,700 to 6,900 level. The next projected upside target is near 7,200. As the index approaches this level investors will be alert for end-of-trend behaviour. This includes chart patterns such as the head-and-shoulder pattern or rounding top. The outlook remains bullish pending the development of this behaviour.

The same type of trading band analysis is applied to the Comex Gold chart. This gives an upside target near US$4,450 per ounce. The gold price has already moved close to this level in October; but the next up move should reach and exceed this target level.

The most significant change on the gold price chart is the placement of the trend line. It has three anchor points, shown as A, B and C in the accompanying chart. This confirms the validity of the line placement. Any pullback will use the value of the trend line as a support feature.

Trend strength is confirmed by the reaction of the long-term GMMA group of averages to the pullbacks at points B and C. This long-term group of averages did not compress and this shows very strong buying support for the trend.

This combination of features – trend line, GMMA and trading band behaviour – makes it a high probability that price will reach the US$4,450 level. The combination does not provide clues to how much higher price can go above the target level. Future developments will use the value of the trend line as the primary trend support feature.

The approach taken by our seven-year-old may serve investors best. He is pretty certain he knows the truth about Santa, but he is not going to reject the gifts Santa brings. But just as a backup, he is stashing away his pocket-money reserves into physical items so he can handle the time when Santa disappears. It’s not a bad investment strategy in the current environment.