Summary: Investors reassessed the risks of the new Omicron variant and determined the impact may be less than initially thought on Friday. Equities rose while bond yields declined. All S&P 500 sectors gained for the day, despite gains not being broadly shared across individual stocks.
Notes
Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.
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Monday, November 29, 2021
Facts: +1.88%, Volume higher, Closing Range: 73%, Body: 34% Green
Good: Higher high, higher low, good closing range
Bad: Faded from intraday high, advance/decline line low
Highs/Lows: Higher high, Higher low
Candle: Medium-sized green body in between equal length upper and lower wicks
Advance/Decline: 0.47, two declining stocks for every advancing stock
Indexes: SPX (+1.32%), DJI (+0.68%), RUT (-0.18%), VIX (-19.78%)
Sector List: Technology (XLK +2.50%) and Consumer Discretionary (XLY +1.55%) at the top. Consumer Staples (XLP +0.25%) and Industrials (XLI +0.17%) at the bottom.
Expectation: Sideways or Lower
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Market Overview
Investors reassessed the risks of the new Omicron variant and determined the impact may be less than initially thought on Friday. Equities rose while bond yields declined. All S&P 500 sectors gained for the day, despite gains not being broadly shared across individual stocks.
The Nasdaq rose +1.88%. Volume returned to pre-holiday levels. The candle has a medium-sized green body in between equal length upper and lower wicks. The chart shows a higher high and a higher low, and the closing range is good at 73%, but there were more than two declining stocks for every advancing stock.
The S&P 500 (SPX) gained +1.32%, while the Dow Jones Industrial Average (DJI) climbed +0.68%. Small-caps did not do well, with the Russell 2000 (RUT) declining -0.18% in a rollercoaster session. The VIX Volatility Index fell back -19.78% after soaring over 50% on Friday.
All eleven S&P 500 sectors gained for the day. Technology (XLK +2.50%) and Consumer Discretionary (XLY +1.55%) were at the top of the list. Consumer Staples (XLP +0.25%) and Industrials (XLI +0.17%) were at the bottom. It's notable that some caution persisted with the Utilities (XLU +1.48%) sector in the third position in the list and outperforming the broader S&P 500 index.
Pending Home Sales for October grew 7.5% month-over-month, much higher than the expected +0.9%.
Jerome Powell testified before Congress this morning, stating that the new Omicron variant and rising cases of COVID in the world could further impact supply chain issues, put more upward pressure on prices, and hurt job growth.
The US Dollar index (DXY) rose +0.13% today. US 30y, 10y, and 2y Treasury Yields recovered some of Friday's sharp decline. High Yield (HYG) and Investment Grade (LQD) Corporate Bond prices increased.
Silver and Gold prices declined. Crude Oil Futures rose after a massive decline on Friday.
The put/call ratio declined to 0.591 as investors looked to buy the dip. The CNN Fear & Greed Index dropped into the Fear area.
The four largest mega-caps all advanced for the day. Apple (AAPL) gained +2.19%. Microsoft (MSFT) closed above its 21d EMA after dipping below the line on Friday, gaining +2.11% today. Amazon (AMZN) advanced +1.63%. Alphabet (GOOGL) gained +2.35%, closing above its 50d MA but remaining below its 21d EMA.
Chipmakers did well today as Nvidia (NVDA) topped the mega-cap list with a +5.95% advance. Tesla (TSLA) and Qualcomm (QCOM) followed Nvidia in the list, with +5.09% and +4.55% gains. Most mega-caps gained. Pfizer (PFE) was the worst-performing mega-cap of the day, declining -2.96% after climbing more than 6% on Friday.
The Daily Update Growth List was about half gainers and half losers. Nvidia also topped the growth list, followed by Zscaler (ZS), which gained +5.65% and reports earnings tomorrow. The biggest loser on the list was GrowGeneration (GRWG). The cannabis stock declined -6.73%
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Looking ahead
CB Consumer Confidence numbers will be available in the morning.
Janet Yellen will join Jerome Powell in more testimony before congress.
API Weekly Crude Oil Stock will be available in the afternoon.
Salesforce.com (CRM), Zscaler (ZS), NetApp (NTAP), Hewlett Packard (HPE), Box Inc (BOX), and UP Fintech (TIGR) report earnings tomorrow.
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Trends, Support, and Resistance
The Nasdaq climbed back above its 21d EMA today. Despite fading from the intraday high, the index closed well above the key moving average line.
If the one-day trend line continues into Tuesday, we can expect a +1.18% gain.
The trend line from the 11/10 low points to a +0.25% gain.
If the index returns to the five-day trend line, that would mean a -1.54% decline for tomorrow.
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Wrap-up
There was a lot more confidence among investors on Monday than there was on Friday. Still, there are some signs of weakness. The low advance/decline line means investors were picky about where to place their bets. The Utilities sector is a defensive play for investors and was the third-best sector, outperforming the S&P 500 index. Finally, today's intraday high landed at the 50% retracement from last Monday's all-time high. At that point, the index started to fade in the afternoon.
Pay attention to comments from Jerome Powell and Janet Yellen tomorrow morning. Also on the list of worries is funding for the government, which has a deadline looming this week.
Based on the chart, the expectation for tomorrow is Sideways or Higher, but there could be a lot of volatility this week. Hang on for a rough ride!
Stay healthy and trade safe!
