Traders Back to Mull Black Friday Sales

Friday was another nothing day in the market.  SPY opened dead flat, DIA gapped up 0.14%, and QQQ opened 0.09% lower.  At that point, all three major index ETFs traded sideways in a tight range for the rest of the day.  This left the SPY and QQQ printing indecisive Doji candles while the DIA printed a small white-bodied candle with just a tiny wick on top.  Of course, all three remain well above their T-line (8ema).  In fact, the SPY and DIA sit very near their highs for the year (actually two-year highs) while QQQ has already broken out and sits at its two-year highs.  This all happened on very low volume, even considering it was only a 3.5-hour trading day. 

On the day, nine of the 10 sectors were in the green with Healthcare (+0.83%), Energy (+0.77%), and Communications Services (+0.75%) out front leading the way higher as Technology (-0.05%) was the only sector in the red (largely on the drag of NVDA, that was down 1.93%).  At the same time, the SPY gained 0.06%, DIA gained 0.35%, and QQQ lost 0.14%.  The VXX dropped 4.29% to close at 17.42 and T2122 jumped back up into the top end of its overbought range at 97/18.  10-year bond yields jumped up to 4.472% and Oil (WTI) dropped 2.49% to close at $75.18 per barrel.  So, all three major index ETFs closed out a fourth-straight week of gains. 

The major economic news reported Friday was limited to Nov. S&P Global Mfg. PMI came in a bit light at 49.4 (compared to a forecast of 49.8 and an October value of 50.0).  At the same time, November S&P Global Services PMI came in better than was predicted at 50.8 (versus a forecast of 50.4 and the October reading of 50.6).  We also got the November S&P Global Composite PMI came in stable at 50.7 (compared to the October value of 50.7). Later, after the close, the Fed Balance Sheet dropped modestly for the shortened week, falling from $7.815 trillion to $7.811 trillion. 

In Black Friday news, MA reported Saturday that retail sales rose 2.5% year-on-year (excluding Automotive sales).  That number is not inflation-adjusted. The Mastercard SpendingPulse service said they are still expecting a 3.7% increase in holiday (11/-12/24) spending this year.  Online sales also grew 8.5% year-over-year while in-store sales increased by 1.1%.

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In stock news, Reuters reported HSBC customers throughout the UK reported mobile banking outages Friday with thousands of reports per hour for 10 hours.  Across the channel, VLKAF (Volkswagen) announced it will launch a new entry-level priced line of electric vehicles in China by 2026.  At the same time, AMZN was hit with strikes by more than 1,000 workers and even more protesters at distribution centers in Spain, UK, and Germany.  Later, back in the US, NVDA announced it is delaying the release of its new H20 high-end chip.  (The chip was designed to circumvent US sanctions on sales and exports to China.)  The postponement was attributed to server makers having trouble integrating the chip design into their architectures with sources saying the planned November launch possibly come in February or March instead.  Elsewhere, in Sweden, TSLA suffered a major setback.  The company refused to negotiate with 130 union mechanics at its repair facilities.  As a result, other unions are now refusing to load or unload TSLA vehicles from ships and trains.  Other unions have now joined the cause including office cleaners, postal workers, and others.  This has essentially shut down TSLA Swedish operations, one of which feeds the company’s Berlin plant with parts.  On Saturday, it was reported that BRKA had unloaded its entire holdings of PG in Q3. This was notable (curious) because Berkshire Hathaway is always touting its love for “Dividend Kings” with a competitive advantage and PG has a 67-year record of continual dividends, has strong cash flow and margins, and maintains an “economic moat” created by its (by far) category-leading brands like Tide, Crest, Dawn, Gillette, etc.

In stock government, legal, and regulatory news, the NASDAQ reported on Friday that NVOS has now met the exchanges minimum bid price for 10 consecutive days requirement, ensuring it will be listed.  Later, the FAA gave BA “type inspection authorization” for its 737 MAX 10 jet.  This allows BA to begin the final series of its 400 certification test flights (including at least 1,000+ flight hours) needed for certification.

Overnight, Asian markets were red across the board.  Taiwan (-0.87%), Australia (-0.76%), Shenzhen (-0.55%), and Japan (-0.53%) led the region lower.  Meanwhile, in Europe, we see a similar picture, with 12 of the 15 exchanges in the red at midday.  The CAC (-0.05%), DAX (-0.16%), and FTSE (-0.27%) lead the region on volume in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a start to the day just on the red side of even.  The DIA implies a -0.12%) open, the SPY is implying a -0.11% open, and the QQQ implies a -0.06% open at this hour.  At the same time, 10-year bond yields are down to 4.47% and Oil (WTI) is off 1.13% to $74.68 per barrel in early trading.

The major economic news scheduled for Monday is limited to Building Permits (8 a.m.) and Oct. New Home Sales (10 a.m.).  The are no major earnings reports set for before the open.  However, after the close, ZS reports. 

In economic news later this week, on Tuesday we get the Nov. CB Consumer Confidence and API Weekly Crude Oil Stocks Report.  We also hear from Fed members Waller (10:05 a.m.) and Bowman (10:45 a.m.).  Then Wednesday, Q3 GDP, Q3 GDP Price Index, Oct. Trade Goods Balance, Oct. Retail Inventories, Weekly EIA Crude Oil Inventories, and Fed Beige Book are reported.  On Thursday, we get Oct. Core PCE Price Index, Oct. PCE Price Index, Weekly Initial Jobless Claims, Oct. Personal Spending, Nov. Chicago PMI, and Oct. Pending Home Sales.  We also hear from Fed member Williams (9:05 a.m.).  Finally, on Friday, we get Nov. S&P Global Mfg. PMI, Nov. ISM Mfg. Employment, Nov. ISM Mfg. PMI, and Nov. ISM Mfg. Price Index.  We also hear from Fed Chair Powell at 11 a.m.

In terms of earnings reports later this week, on Tuesday we hear from BNS, ESLT, PDD, CRWD, FLNC, HPE, INTU, NTAP, SPLK, and WDAY.  Then Wednesday, BILI, DLTR, DCI, FTCH, FL, HRL, PDCO, WOOF, VSTS, CG, FIVE, YY, LZB, NOAH, NTNX, OKTA, PSTG, PVH, CRM, SNOW, SNPS, and VSCO report.  On Thursday, we hear from ASO, BIG, DOOO, CM, CBRL, EXPR, KR, RY, TD, TITN, AMWD, DELL, MRVL, and ULTA.  Finally, on Friday, GCO and BMO report.

In China news, Bloomberg reported Friday that there is another widespread health issue in that country.  There is a wave of pneumonia cases across China which has already stretched the Chinese hospital system.  The interesting thing about this wave of infections is that it seems to be disproportionally attacking children. The surge in cases has prompted the World Health Organization to ask for more details (to allay global fears about the sudden spike in respiratory illnesses potentially being due to another novel pathogen).  Elsewhere, on Saturday, Chinese police said they have opened an investigation into Zhongzhi Enterprise Group (which is a major player in China’s real estate sector as well as the country’s $3 trillion “Shadow Banking” industry.  Zhongzhi told investors last week that it was insolvent with $64 billion in liabilities and $28 billion in assets.

In miscellaneous news, Crude Oil (WTI) settled lower Friday but was slightly higher (essentially flat) on the week as traders wait on the delayed OPEC+ meeting.  (The meeting was delayed to Nov. 30, with the claim being that the delay was due to the Israel vs. Hamas war in Gaza.  However, there are reports that the real cause was differences among OPEC+ members over production levels.)  Analysts are still saying the most likely outcome is that the previous production cuts are extended.  Elsewhere, a four-day truce took effect Friday in Gaza.  Hamas released 24 of its hostages while Israel released 39 women and children it has detained for years.  According to the agreement, Israel will also allow 200 trucks of humanitarian aid into Gaza each of the four days.  On Sunday, Hamas released 17 more hostages (including a 4-year-old American girl) while Israel released another 39 women and children it had held in jail.   

With that background, it looks like markets are undecided so far in the premarket session with all three major index ETFs just on the red side of flat. In addition, all three are printing indecisive candles so far in the early session. All three major index ETFs remain well above their T-line (8ema) and 50smas. So, the Bulls are in still well in control of both the trends. In terms of extension, the major index ETFs are at the edge of being too far extended above their T-lines (8emas). Meanwhile, the T2122 indicator is back deep inside of its overbought territory. So, we don’t have a lot of slack for Bulls to work with and the market is in need of some rest or a pullback to remain a healthy rally. With that all said, remember that the market can remain extended longer than we can stay solvent being right too early.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.


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