The week that was…
While it is never always positive, it does “feel” like Thanksgiving week is often quite bullish for stocks. Light volume, generally positive feelings of the holiday, mild meltups often seem to happen in years not called 2008 or 2000. This year we had the added bonus of a break to the upside preceding this past week and the NYSE McClellan Oscillator finally giving us a buy signal, so true to form it was generally a solid week with a nice start Monday and a nice close Friday sandwiching two very quiet days. We continue to see a lot of nice moves in “growth sectors” vs defensive sectors. For the week the NASDAQ rose 1.5%, while the S&P gained 1.4%. The Russell climbed 2.3%.
“The post election narrative is still in place, with investors continuing to focus on fiscal policy and regulatory easing. That’s giving the market reason to be optimistic, and it means that the path of least resistance is higher for now,” said Aaron Clark, a portfolio manager at GW&K Investment Management, which has $33 billion in assets under management. Despite that, Clark added that “I’m surprised by how quickly markets have priced in the positive impact of the election, as though changes to taxes and regulation can be done with the snap of a finger. I don’t think we’ve overshot on the upside, but we could see buyer’s remorse if the market starts to think it is ignoring risk.”
A Federal Reserve rate hike in December is now built into this market and the minutes released Wednesday did nothing to dissuade that line of thought. The Fed minutes showed that policy makers agreed an interest-rate increase may be appropriate relatively soon.
Economic news was sparse with the highlight being Wednesday’s durable goods # which surged 4.8% in October, in large part due to strong demand for commercial aircraft.
Fun fact: Online shopping on Thanksgiving Day itself delivered $1.15 billion in sales, an increase of 13.6% over last year, according to Adobe Systems. Of that revenue, $449 million came via a mobile devices — 58.6% more than last year.
Here is a 5 day “intraday” chart of the S&P 500 via Doug Short.
We have discussed the “great rotation” among sectors the past 2 market recaps; here is a similar but extended view from Fidelity – a good read!Continue reading