General Market Observations For November 28:
The Conference Board’s Consumer Confidence rose to 125.90 in October, the highest since the end of 2000. Is this bullish or bearish for the stock market? We will take a look.
While the NYSE cumulative and common stock only advance – decline line both hit ATH’s this week, more than 8% of stocks on the S&P 1500 hit oversold levels last week while more than 8% hit overbought levels. Yes, this remains a strange market.
Seasonality Very Favorable: Over the past 20 years, November has been one of the most consistent months of the year, with the S&P 500 (NYSEARCA:SPY) rising 74% of the time. The average return for the month has been 1.3%. December is also consistent, rising 74% of the time, and averaging 1.5% for the month. Another holiday rally on deck?
For the past 20 years, the NASDAQ 100 ETF (NASDAQ:QQQ) has seen an average rise in November of 1.7%, and rose 72% of the time. For December, the QQQ’s only rose 47% of the time, but the average gain was 1.5%.
The small cap Russell 2000 usually finishes up the year very strong. The “2000” rose 74% of the time in November and 79% in December over the past 20 years with average gains of 2.2% in November and 3% in December.
S&P 500 Outlook – INTERMEDIATE TERM
On the daily chart, the “500” continues to hug the upper trendline of the bullish channel that has been in place since April. It’s possible that a second bearish momentum divergence will be seen on the daily chart with respect to the 14-day RSI as well as the daily MACD. In addition, the momentum uptrends since August have broken down, a possible sign of a change in trend. While some may say the price uptrend off the August low has given way, there has been zero technical damage from a price perspective.
I continue to instruct clients to buy the dip if we ever get one. A blast above 2,600 would suggest no decent corrective action for now.
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The author is short gold via a position in DUST at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.