Daily Market Update for 11/27

Original Chart

Trend lines drawn from the 10/30 bottom (20d), 11/20 (5d), and today 11/27 (1d).

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Friday, November 27, 2020

‘Cause you’re a natural, a beating heart of stone

Facts: +0.92% higher, Volume lower, Closing range: 63%, Body: 57%
Good: Did not revisit morning lows, high closing range.
Bad: Could not keep highs, after gap up opening
Highs/Lows: Higher high, Higher low
Candle: 43% upper wick on top of solid green body. No lower wick.
Advance/Decline: 1.84, almost two advancing stocks for each declining stock
Sectors: Health ( XLV +0.92%) and Communications ( XLC +0.64%) were top sectors. Energy ( XLE -1.17%) was the worst preforming.
Expectation: Sideways

Market Overview

The short trading day after Thanksgiving brought a nice gain for the Nasdaq, but on lower volume . The index gapped up in the morning and had steady gains, until mid-morning brought some selling. It finally turned back to the positive just before close. The index finished up +0.92% with a closing range of 63% and a solid green body of 57%. There was no lower wick, but the 43% upper wick shows the selling that occurred after making a new all-time high.

Indexes and Sectors

The S&P 500 SPX +0.24%) ended the day with a dojicandlestick where the open and close are very close to each other. The Dow Jones Industrials (DJI -0.13%) had inside days the past two days, trading within the range of Tuesday’s huge gains. The Russell 2000 (RUT +0.56%) continues to trade near all-time highs after a slight pullback on Wednesday. The patterns show a bit of indecision in the market, but also come during light trading during the holidays.

Health ( XLV +0.92%) emerged as the leading sector late in the morning. Technology ( XLK +0.53%), Communications ( XLC +0.64%) and Materials ( XLB +0.52%) all traded the top spot before Health passed them. All other sectors had losses for the day with Energy ( XLE -1.17%) ending the day as the worst performing sector.

The VIX volatility index decreased by -1.93%, continuing a downward trend and closing at its lowest point since February.

Market Indicators

snapshot

US30Y and US10Y bond yields fell on Friday and the US30Y-US10Y and US10Y-US02Y spreads both tightened.

Corporate Bond yields dropped for the day and the Corporate bonds to Treasury bonds spread tightened.

snapshot

The US dollar DXY -0.22%) dropped below a support area and is at its lowest point since April, 2018.

Silver SILVER -2.71%) and Gold GOLD -1.14%) continued a downward trend that started at the beginning of November. Crude Oil Futures (CRUDEOIL1! +1.20%) rose for the day. Timber (WOOD +0.51%) increased for the day.

snapshot

The put/call ratio dropped to 0.505 and is showing very bullish sentiment. The put/call ratio (PCCE) is a contrarian indicator that shows overly bullish or overly bearish investor behavior. 0.7 is considered normal. As it approaches 0.60 (overly bullish ) and below, watch for a possible reversal in the market.

Market Leaders

snapshot

All four of the big mega-caps closed the day with gains. Microsoft MSFT +0.64%), Amazon ( AMZN +0.32%) and Alphabet GOOGL +1.3%) all traded above the key 21d EMA and 50d MA lines. Apple AAPL +0.48%) temporarily traded above the lines but pulled back to close under the 21d EMA . Only Alphabet outperformed the broader index. About half of the mega-caps in the market closed with gains. Tesla TSLA +2.05%) turned in another day of gains. Pfizer PFE +1.92%) also closed with significant gains, buoying the health sector results.

Growth stocks also had a good day. Moderna MRNA +16.35%) and ETSY ETSY +10.66%) were among the stellar breakouts. Cloudflare (NET +6.82%), Zoom Video (ZM +6.29%), Draft Kings ( DKNG +5.02%) were among several other growth stocks benefiting from a positive trading day.

Looking ahead

Monday will be the first full day of trading after the holidays. An OPEC meeting is scheduled for 5:00 EST on Monday and could have some impact on Oil as well as the Energy sector. Pending Home Sales for October will also be announced in the morning. Further impact to the US Dollar could result from a miss in expectations.

Zoom Video is among a small list of companies announcing earnings after market close. Autohome ATHM +3.98%) is a Chinese stock that will announce earnings before open.

Trends, Support and Resistance

The trend lines all point to about the same spot just around today’s all-time high. If the market continues the trend from the 10/30 bottom and the five-day trend, it will result in a +0.27% gain. The one-day trend points to just under that point for a -0.02% loss.

Wrap-up

The shortened day of trading resulted in some good gains on lower volume . Investors remain extremely optimistic and history says to be cautious whenever the market is overly optimistic. However, there are reasons to believe we could still see gains as the Fed continues measures to support the economy. Growth stocks will benefit from that momentum and large multi-nationals will benefit from a weakening dollar. It’s a good time be in the market to profit from the gains but keep stop losses in place to protect from potential swings to the downside.

Take care!

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