November 28, 2019
By Mish Schneider
And so, the day before the Thanksgiving break, the stock market also smacked its tongue at the thought of receiving a tasty treat.
What is the treat the market anticipates masticating?
Mainly, it’s the completion of phase one of the trade talks, despite any hard evidence that China has gone to the pantry to pull out that treat.
Yet Wednesday we saw more new all-time highs in the S&P 500, NASDAQ 100 and Dow, plus a new multi-month high in the Russell 2000.
Ahead of Black Friday, there is also hope that the better-than-expected GDP of 2.1% will encourage consumers to go out and spend more money, increasing the household debt even further.
What continues to leave a bad taste for many investors is the nagging disparity between the “inside” of the market and the S&P 500.
Going forward, that could mean that these lagging sectors are the best investment for a December catch-up trade.
It could also mean that they continue to signal stress just like what will happen to pup if she does not get that treat.
Since this is the last blog until Monday, the weekly charts of the economic Modern Family are from Wednesday. Therefore, there could be some price adjustments based on Friday’s half-day activity.
The following analysis and actionable information is meant for Monday December 2nd.
The Russell 2000 IWM, made an impressive move above the April highs.
Now, with about 7% more to go before it gets to its all-time highs, at least old Gramps gave out decent treats to the bulls.
What I am interested in is what Granny Retail XRT decides to do.
A significant move will be one through the November highs. That will negate the overall pattern of lower highs since a year ago, October 2018.
Although XRT will face resistance at the April 2019 highs, erasing the lower highs pattern going back over a year, is compelling.
Transportation IYT closed red on Wednesday. It could be noise as the phase did not change. Nevertheless, IWM’s supply needs to move through IYT’s channels to prove demand.
Something to keep eyes on.
Regional Banks KRE looks better. That could mean the sector is anticipating a better economy, hence, a less dovish Fed concering rates.
Biotechnology IBB, is the best reflection of the Modern Family’s anticipation that the treats will keep coming. The public loves to buy this sector as the rewards, as you can see, can be quite satisfying. Should that change, that too will be noteworthy.
After the bearish engulfing pattern we saw last week in Semiconductors SMH, this week the price traded inside that candlestick. This is known as an inside week.
Just as XRT could be the best laggard buy should the market continue its upward trajectory, this is the best place to go short should the market stall out.
A move under the big red candle’s low or 130.60 is what I would look for.
Naturally other factors will influence the market’s next direction. Interest rates, the dollar, geopolitics, commodities prices-all of these are the periphery factors one should also watch for clues.
In the meantime, Pup is saying, “Have yourselves a tasty Thanksgiving filled with love.”
We at MarketGauge are sincerely thankful for all of your support!
Russell 2000 (IWM) 160.46-161 the support with 162.74 the pivotal area to watch hold or not.
Dow (DIA) The all-time high at 281.91. 279.70 support
Nasdaq (QQQ) All-time highs at 206.05. 203.15 the pivotal support
KRE (Regional Banks) 56.00 support and 57.33 the November high to clear
SMH (Semiconductors) 135.26 all-time high. 133.20 pivotal support
IYT (Transportation) 195 key support with 198.26 and 200 resistance areas
IBB (Biotechnology) 116 support with 120-123 resistance. All time here was made in 2015.
XRT (Retail) 44 support and 45.41 resistance
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