Daily Market Update for 11/30

Original Chart

Trend lines drawn from the 10/30 bottom (21d), 11/23 (5d), and today 11/30 (1d).

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Monday, November 30, 2020

Takin’ everythin’ in my stride

Facts: -0.06% lower, Volume higher, Closing range: 79%, Body: 12%
Good: Long lower shadow, filled gap but held support at 12,000
Bad: Dip in morning after a new all-time high
Highs/Lows: Higher high, Lower low
Candle: Outside day, 12% red body with long lower wick.
Advance/Decline: 0.58, about three declining for every advancing stock
Sectors: Technology ( XLK +0.67%) and Health ( XLV +0.27) were the only gaining sectors. Energy ( XLE -5.53%) was the worst preforming.
Expectation: Higher

Market Overview

Gap filled. 12,000 support held. New Intraday all-time high. The Nasdaq held a volatile session today that started with a new all-time high in the morning, but quickly turned down to fill the gap from Friday’s open and test the 12,000 support area . The good news is that it successfully held the support and closed not too far from the day’s highs. The bad news is it caused a lot of churn in many portfolios as there were 3 declining stocks for every 2 advancing stocks. The index closed with a small -0.06% loss, a sideways move that is not unexpected after last weeks gains. The closing range is 79% with a 12% body and a long lower wick that shows the bears ruled the morning, but the bulls saved the day.

Indexes and Sectors

The S&P 500 SPX -0.46%), Dow Jones Industrials (DJI -0.91%) both fell for the day, but it was the Russell 2000 (RUT -1.91%) that felt the most pain. The RUT ended the day with a thick red-body candle and a 15% closing range. The RUT is still above its 10d MA and was due a pullback after the incredible gains over the last three weeks.

Technology ( XLK +0.67%) was the top sector of the day. Health ( XLV +0.27%) led most of the day, but was passed by Technology in late afternoon trading. All other sectors had losses for the day. Energy ( XLE -5.53%) fell back significantly after OPEC warned of immense challenges caused by the COVID-19 pandemic.

The VIX volatility index decreased by -1.30%, continuing a downward trend and closing at its lowest point since February.

Market Indicators

snapshot

US30Y and US10Y bond yields fell on Monday while the US30Y-US10Y and US10Y-US02Y spreads remained about the same.

Corporate Bond yields rose slightly for the day and the Corporate bonds to Treasury bonds spread remained about the same.

snapshot

The US dollar DXY +0.23%) gained back some of last week’s losses, but remains below a support area .

Silver SILVER -0.25%) and Gold GOLD -0.60%) continued a downward trend that started at the beginning of November. Crude Oil Futures (CRUDEOIL1! -1.13%) ended the day with losses. Timber (WOOD -0.94%) fell back just slightly.

snapshot

The put/call ratio rose to 0.610 after hitting dangerous lows last week. The pullback in the market helped cool off some of the overly 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

Apple AAPL +2.11%) finally broke out above the 21d EMA and 50d MA lines, after a couple weeks of consolidation. Microsoft MSFT -0.54%), Amazon ( AMZN -0.85%) and Alphabet GOOGL -1.83%) all had losses but are all trading at or above the key moving average lines. Microsoft had a dip below the 50d MA, but recovered and closed above both the 50d MA and the 21d EMA . Most mega-caps had losses on the day. Pfizer PFE +2.90%), Roche Holding (RHHBF +2.17%) and Apple were the only mega-caps to close with more than 2% gains.

Growth stocks had a mix of results. Moderna MRNA +20.24%) did not get the memo on the stock market pullback and shot up another 20%. AMD (AMD +6.27%) broke out of a double-bottom on positive outlook from the CEO. Peloton (PTON +6.76%), Datadog DDOG +2.59%) and Zoom Video (ZM +1.43%) were among pandemic stocks that had gains on the day. Zoom Video is down -5% after hours despite exceeding expectations in their earnings release.

Chinese stock Autohome ATHM -10.83%) was down significantly after beating expectations but missing on revenue in their earnings release before market open. Also, Chinese stocks NIO NIO -6.43%), Alibaba (BABA -4.75%) and JD .com ( JD -4.54%) also sold off significantly today. It could be related to the semi-annual MSCI rebalance which would impact passively indexed ETFs. The rebalance reduced exposure to Hong Kong stocks to make room for an upgrade of status to Kuwait and increase in India’s weight. It is not clear if that’s the entire reason for the declines.

Looking ahead

All eyes will be on Federal Reserve Chair Jerome Powell as he testifies before congress on the state of the economy, scheduled to start at 10am. Manufacturing data will also be released tomorrow giving an update on economic activity.

There are no notable earnings reports tomorrow for this daily update.

Trends, Support and Resistance

All three trend lines point to positive gains. The one-day trend points at the same point as the long-term trend from the 10/30 bottom. That would result in a +0.50% gain. The five-day trend is pointing to a +0.99% gain. Either result would be a new all-time high.

Wrap-up

There were three factors that impacted stocks today. First OPEC released comments from their meeting that said there were immense challenges on the horizon, impacting crude oil prices and the energy sector. The outlook and the rising challenges with the pandemic second wave also depressed travel, transportation, and leisure stocks.

Pending New Home Sales and Chicago Purchasing Manufacture’s Index were less than expected and seemed to add to an already declining market. The declines accelerated before reversing at 10:45am on the Nasdaq.

The final factor for today was the semi-annual index review of the MSCI which upgraded Kuwait to an emerging country and added to the weight of India. It seemed to have at least some impact on Chinese stocks as money rebalanced between the markets represented.

Overall, the Nasdaq gave some signs of strength even as it closed with a loss for the day. The drop to fill the gap from last Friday did not come as a big surprise. The further dip tested the 12,000 support area and the index rose from there to get back to the top of the daily trading range. That should give some optimism for the week ahead, but further economic news is on the way, including comments from the Fed during tomorrow’s Joint Economic Committee meeting.

Take care!

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