Daily Market Update for 11/26

Original Chart

Notes

Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.

Friday, November 26, 2021

Facts: -2.23%, Volume lower, Closing Range: 13%, Body: 63% Red
Good: Not much, lower volume avoids distribution day
Bad: Drop below 21d EMA and below 15,600, very low A/D ratio
Highs/Lows: Lower high, Lower low
Candle: Mostly red body, low closing range, lower high/low
Advance/Decline: 0.16, More than six declining stocks for every advancing stock
Indexes:SPX (-2.27%), DJI (-2.53%), RUT (-3.67%), VIX (+54.04%)
Sector List: Health ( XLV -0.37%) and Consumer Staples ( XLP -1.26%) at the top. Financials ( XLF -3.32%) and Energy ( XLE -4.02%) at the bottom.
Expectation: Lower

Market Overview

Few stocks avoided the sell-off on Friday as investors fled the market on fears of a significant new variant of the Coronavirus. Treasury Yields dropped as money moved from equities to bonds.

The Nasdaq fell -2.23%, dropping below the 21d EMA and the 15,600 support area . As the index tried to rally, that area became resistance. The candle is 63% red body with an upper wick longer than the lower wick. The closing range of 13% shows that sellers were in control into the close. There were more than six stocks that declined for every stock that advanced .

Small-caps took the biggest hit, with the Russell 2000 (RUT) dropping -3.67%. The S&P 500 (SPX) declined -2.27%, and the Dow Jones Industrial Average (DJI) fell -2.53%. The VIXVolatility Index ( VIX ) shot up +54.04%, closing at its highest point since February.

All S&P 500 sectors declined for the day. Health ( XLV -0.37%) and Consumer Staples ( XLP -1.26%) had the smallest losses. Good performances from Pfizer and Moderna helped the Health sector. Financials ( XLF -3.32%) and Energy ( XLE -4.02%) were at the bottom of the sector list. Financials fell on the lower Treasury Yields. Energy fell along with all travel stocks as countries implemented new travel restrictions.

The US Dollar index fell -0.74%. The US Dollar weakened while the Japanese Yen strengthened. The Euro also strengthened relative to the US dollar . US treasury yields dropped sharply. The US 30y and 10y yields fell -6.86% and -9.40%, while the 2y yield dropped -21.80%. High Yield ( HYG ) Corporate Bond prices declined sharply while Investment Grade ( LQD ) Corporate Bond prices rose.

Crude Oil Futures fell -11.15% on new travel restrictions. Timber, Copper , and Aluminum Futures all dropped as well. Gold prices rose slightly while Silver prices declined.

The put/call ratio ( PCCE ) climbed to 0.756. The CNN Fear & Greed Index dropped well into the Fear level. The NAAIM Money Manager Exposure Index remained above 100 for a fifth week, climbing slightly to 103.14 this week. The index comes out on Wednesdays, so Friday’s sell-off is not counted. It is unusual to stay above 100 for five weeks, so the new variant scare may be just what money managers needed to finally lower exposure.

Of the four largest mega-caps, only Apple AAPL ) remained above its 21d EMA despite falling -3.17% today. Microsoft MSFT ) and Amazon ( AMZN ) fell below their 21d EMA , with -2.44% and -2.12% declines. Alphabet GOOGL ) closed below both its 21d EMA and 50d MA, declining -2.69% today.

Pfizer PFE ) was the best performer among a small number of mega-caps that gained today. Pfizer rose +6.11%. Stay-at-home stock Netflix NFLX ) was in the top three, gaining +1.12%. Mastercard (MA) was at the bottom of the mega-cap list, declining -4.66% today.

A lot of familiar names from 2020 popped to the top of the Daily Update Growth List. Zoom Video (ZM) and Peloton (PTON) topped the list with 5.72% and 5.67% gains. Chewy CHWY ) and DocuSign DOCU ) were third and fourth. Chinese stocks fell the most. UP Fintech ( TIGR ) and FUTU Holdings ( FUTU ) were at the bottom of the growth list, declining -7.66% and -8.67%.

Looking ahead

What we learn about the new Coronavirus variant over the weekend will be the top economic news. Jerome Powell and Janet Yellen will speak on Monday morning at 10:00a, and the threat of a new wave of restrictions will be a topic. Other Fed officials speak throughout the day.

Pending Home Sales data for October will be available on Monday morning.

Trends, Support, and Resistance

The Nasdaq fell below the 15,600 area and closed below its 21d EMA . After attempting a rally in the afternoon, the index met resistance at the same 15,600 area.

If the index returns to the trend line from the 11/10 low, it would mean a +2.31% gain on Monday.

The five-day trend line points to a -0.03% decline.

If the one-day trend line continues into Monday, it would mean another -2.73% decline.

Wrap-up

The news was grim. A new variant of the Coronavirus out of South Africa, now named Omicron, threatens to shut down travel and begin new lockdowns in countries worldwide. Not much is known about the variant yet, but scientists see similarities to the changes in Delta, although they haven’t proven anything about Omicron’s characteristics yet.

So what happens on Monday depends on what headlines come out over the weekend. Will scientists and journalists declare we overreacted, or will they double-down with a message of caution among fear of a powerful variant?

Based on today’s performance, the expectation for Monday is lower.

Stay healthy and trade safe!

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