Markets largely unchanged after the Thanksgiving holiday and its possible it could be a light and choppy Monday as many traders likely traveling home or extending their vacation time with family.  The T2122 indicator continues to display a short-term overbought condition but there is no clue in the price action that the bulls are ready to stop buying just yet.  Today we will look for inspiration in the New Home Sales and Dallas Fed MFG numbers with a very light day of earnings.  However, with pending GDP and PCE numbers mid-week we can expect substantial volatility as the market reacts. 

Asian markets sold off across the board while we slept with Chinese real estate decline and a Japanese surge of 2.3% in service inflation bringing out the bears.  European markets are also starting the week lower across the board modestly giving up some of last week’s gains.  U.S. futures point to a slightly lower open with eyes on the market moving GDP and PCE numbers pending mid-week. 

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include CRNC,& ZS.

News & Technicals’

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The stock markets in the Asia-Pacific region fell on Monday, as the Chinese market was dragged down by the slump in the property sector, while the Japanese market faced the pressure of rising service inflation. The Chinese property firms suffered from the ongoing debt crisis of Evergrande, the largest real estate developer in China, which missed another bond payment deadline last week. The property sector accounts for a large share of the Chinese economy, and its troubles have dampened the investor sentiment and the consumer confidence. The Chinese industrial profits also declined for the third consecutive month in November, but at a slower pace than before, indicating some signs of recovery. The Chinese market will be closely watching the official and the Caixin manufacturing data for November, which will be released later this week. The Japanese market was also under stress, as the service producer price index, which measures the changes in the prices of services, rose to 2.3% in October, the highest level since January 2020. This was higher than the 2% increase in September, and reflected the impact of higher energy and transportation costs. The service inflation added to the worries of the Bank of Japan, which has been struggling to achieve its 2% inflation target for years.

U.S. consumers spent $9.8 billion online on Black Friday, the biggest shopping day of the year, according to Adobe Analytics. This was a 7.5% increase from last year, and showed that consumers were eager to take advantage of the big discounts offered by retailers. Consumers also found it easier to compare prices and deals online, rather than going to physical stores. However, the online spending spree is expected to slow down after Cyber Monday, the next big deal day, as retailers will reduce their discounts for the rest of the holiday season.

The stock market was almost unchanged on Friday, after the Thanksgiving holiday. The S&P 500 had a small 1% increase for the week, extending its positive streak for the fourth week in a row. There was not much news to move the market today, from the economic or the earnings front. The market seems to be waiting for the PCE inflation report next week, which is the Fed’s preferred measure of inflation. The interest rates on Treasury bonds rose slightly, with the 10-year yield ending at around 4.45%. The Asian markets struggled do to the sharp declines in real estate price while Japanese service inflation surged 2.3% bring out the bears. We have a light day on the earnings calendar but we have New Home Sales and the Dallas Fed numbers for the bulls or bears to find inspiration.  Keep in mind many traders will be traveling home from the holiday so don’t be surprised if the volume is light.

Trade Wisely,

Doug