Market Trader Edition No. 16
Market Trader Edition No. 16
Market Trader's goal is to bring you potential swing setups with a time horizon from days to months depending on price action. The stock selection is based on Fundamentals & Technical Analysis.
What is included in this week's edition?
WEEKLY REVIEW - An overview of current market standing, fundamental matters with implications upon the market, and general sentiment regarding the major US indices.
FUTURES & COMMODITIES MARKETS - A technical review of the major indices, futures, and commodities that represent the overall health of the market.
SPDR SECTORS & ETFs - An in-depth review of the SPDR sectors with keynotes on market strength, opportunities, and relative rotation.
STOCKS TO WATCH - Trends, key levels, and trade targets are identified for individual names presenting potential opportunities in the market.
LOOKING AHEAD - Key takeaways to be mindful of as we look forward to the upcoming trading week.
Market Trader by MyntBit
Weekly Review
Nine of the 11 S&P 500 sectors closed with a gain on the week. Communication services (+3.3%) and consumer discretionary (+2.1%) enjoyed the biggest gains. Meanwhile, financials (-0.6%) and energy (-2.0%) were the lone sectors in the red by the end of the week.
On Wednesday, the market liked what it heard in Mr. Powell's dovish speech and things took off in a big way. He reportedly did not tighten the screws of his monetary policy position any further. This triggered a huge short-covering rally and some chasing action as the S&P 500 broke above key resistance at its 200-day moving average.
It was an overreaction in our estimation because the Fed Chair repeated just about everything he said following the November FOMC meeting, but in splitting linguistic hairs, some added attention was paid to his summation that "the ultimate level of interest rates will be somewhat higher than previously expected" versus the original contention that "the ultimate level of interest rates will be higher than previously expected."
Powell's remarks (and tone) presumably lessened the fear of another 75-basis point rate hike. Granted the fed funds rate is still going higher from current levels, but market participants can smell a peak in the policy rate around 5.00% in the first half of next year. If the FOMC elects to raise the target range by 50 basis points at the December meeting, the target range will be 4.25-4.50%.
On Thursday, traders received the October Personal Income and Spending Report, which favored the "smaller" rate hike at the same time it favored a soft landing possibility.
On a year-over-year basis, the PCE Price Index was up 6.0%, versus 6.3% in September, and the core-PCE Price Index was up 5.0%, versus 5.2% in September. The key takeaway from the report was the improvement in the inflation readings, particularly the core-PCE Price Index given Fed Chair Powell's emphasis that the Fed's policy tools are better designed for working on core inflation.
The big rally effort ran into some resistance as market participants contended with the notion that the upside moves might have been an overreaction and that the growth environment is going to be challenging given the past rate hikes and the rate hikes that are yet to come.
The strength of the mid-week rally was tested again when we received the November employment report on Friday. Nonfarm payroll growth was higher than expected, the unemployment rate held near a 50-year low of 3.7%, and average hourly earnings increased at a robust 0.6% month-over-month, leaving them up 5.1% year-over-year.
The report itself was good news from an economic standpoint, yet the market saw it as bad news, thinking it will push out any eventual pivot by the Fed with its monetary policy. In brief, the report signals higher for longer with respect to the target range for the fed funds rate.
The initial retreat following the employment report saw the S&P 500 breach its 200-day moving average, but by Friday's close, the index reclaimed a position above that level. All in all, this week was a win for the bulls given that the market showed nice resilience to selling efforts and the S&P 500 held the line at that key technical level.
In the Treasury market, there were big downswings predicated on the thinking that maybe the Fed won't have to raise rates as high as feared. The continued inversion along the yield curve reflects the festering concerns about the Fed raising rates into a weakening economy and inviting a recession. The 2-yr note yield fell 19 basis points to 4.29% and the 10-yr note yield fell 18 basis points to 3.51%.
Source: briefing.com
Market Heatmap
Sector Heatmap
Future & Commodities Markets
ES - Emini S&P 500
Support: 4000, 4040
Resistance: 4100, 4130
NQ - Emini Nasdaq 100
Support: 11800, 12000
Resistance: 12150, 12300
VIX - Volatility Index
Support: 18, 16
Resistance: 21.68, 20, 23.80
SPDY Sectors & ETFs
SPY - S&P 500 ETF
QQQ - Nasdaq 100 ETF
IWM - Russell 2000 ETF
Stocks To Watch
Stock Watchlist
Below is a table of stocks that are on our watchlist.
Stock Options Flow
⚠️ Open it in a new tab or download it. This will allow you to zoom in.
Looking Ahead
Next week, Friday’s update on November’s Producer Price Index (PPI) will headline the docket. The headline PPI figure is forecasted to show prices rose 7.2% year-over-year, easing from October’s 8% annual gain.
Traders will also be focusing on November’s finalized numbers for S&P Global U.S. Services Purchasing Managers’ Index (PMI) and Composite PMI. The University of Michigan’s Sentiment preliminary report for December is also scheduled for this week.
Internationally, investors can look for PMI data from France, Germany, and the Eurozone. Meanwhile, the Eurozone and Japan are slated to release their finalized third-quarter Gross Domestic Product (GDP) prints. On Thursday, China’s November Consumer Price Index (CPI) is forecasted to come in at 1.6% year-over-year, easing from October’s 2.1% figure.
In the central bank sphere, Fed officials are scheduled to start their blackout period on December 3, which is expected to last until the conclusion of their December meeting scheduled for December 13-14.
In earnings news, some notable companies reporting this week include AutoZone Inc, Campbell Soup Co, and Costco Wholesale Corp.
Source: wellsfargoadvisors.com
Earnings Calendar
Economical Events
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Disclaimer: This newsletter is not trading or investment advice, but for general informational purposes only. This newsletter represents our personal opinions which we are sharing publicly for educational purposes. Futures, stocks, and bonds trading of any kind involves a lot of risks. No guarantee of any profit whatsoever is made. In fact, you may lose everything you have. So be very careful. We guarantee no profit whatsoever, You assume the entire cost and risk of any trading or investing activities you choose to undertake. You are solely responsible for making your own investment decisions. Owners/authors of this newsletter, its representatives, its principals, its moderators, and its members, are NOT registered as securities broker-dealers or investment advisors either with the U.S. Securities and Exchange Commission, CFTC or with any other securities/regulatory authority. Consult with a registered investment advisor, broker-dealer, and/or financial advisor. By reading and using this newsletter or any of my publications, you are agreeing to these terms. Any screenshots used here are the courtesy of Briefing.com, FXstreet, Google Finance, Unusual Whale, Refinitiv, and/or Tradingview. We are just end-users with no affiliations with them.
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