EB Daily Market Report - Brief Pre-Holiday Update - Tuesday, November 26, 2024
Schedule
Yesterday, I mentioned that there would be no Daily Market Report for either Wednesday or Friday as everyone moves into holiday mode. The stock market volume will tail off considerably tomorrow as many market participants head out of town for the Thanksgiving holiday weekend. The stock market will be open on Friday, but the trading session will be abbreviated, ending at 1:00pm ET.
I failed to mention that there would be NO Live Trading Room on Wednesday. That will resume next Wednesday, December 4th.
We wish everyone a relaxing holiday week and weekend with family and friends!
Brief Update
A few things....
The growth vs. value ratio (IWF:IWD) closed at a 5-week low yesterday as we've seen money rotate more towards smaller stocks and value stocks in recent weeks. I do want to point out that it's LARGE CAP GROWTH that is struggling. Both the small cap growth vs. small cap value ($DJUSGS:$DJUSVS) and mid cap growth vs. mid cap value ($DJUSGM:$DJUSVM) ratios are trending significantly higher. It's the small cap growth and mid cap growth areas where we're seeing an explosion to the upside. Much of small cap growth is taking today off as some profit taking kicks in.
Communication services (XLC, +0.59%), technology (XLK, +0.35%), and consumer discretionary (XLY, +0.20%) are among today's top 4 sectors, which is a change that should be expected from time to time. Software stocks ($DJUSSW, +1.15%) are leading technology higher. One industry group that continues to struggle, however, is semiconductors ($DJUSSC), which is fractionally lower today. The DJUSSC is nearing a 2-month low and a close below 19000 could absolutely lead to further selling. Such a drop also could trigger yet another rally in small caps as rotation into this area could accelerate. I believe many stocks in semiconductors are suffering due to a potential trade war ahead with China. If so, it could take a LONG time before we see the DJUSSC leading the benchmark S&P 500 again.
The 10-year treasury yield ($TNX) is up 5 basis points to 4.32%, but still remains in what I believe is a short-term downtrend to the 4.10%-4.20% range. If the TNX can move back through 4.34%, it would bring my short-term downtrend theory into question. For now, though, I'd expect for yields to turn lower. I mention this, because there is a large number of economic reports due out tomorrow, including initial jobless claims. Due to the Thanksgiving Day holiday, jobless claims were moved up a day. The second estimate of GDP will also be out. Throw in pending home sales, personal income & spending, and the Chicago PMI, and the bond market will be worth watching.
I'll be back next Monday with our Weekly Market Report. Until then, enjoy a nice Thanksgiving Day holiday!
Happy trading!
Tom