EB Daily Market Report - Thursday, November 21, 2024
We've seen U.S. equities turn more bullish the past couple days, first into yesterday's close, and then throughout much of today. One thing that I pointed out during Tuesday's Live Trading Room was the bullish reversal pattern that formed Monday through Wednesday on the IWM. The pullback in the IWM during options expiration week and into the early part of this week presented an opportunity, but I was looking for a spark to ignite another short-term rally. So, on Wednesday morning, this was a chart that I showed members in the trading room:
This reverse head-and-shoulders bottoming pattern was very symmetrical and rather easy to spot. The surge into the close to break above the neckline resistance was our confirmation and you can see the result in the IWM today. During the Live Trading Room, I indicated my preference for the 3x leveraged small cap ETF (TNA) to replace my IWM position. I tend to use this strategy when I feel there is limited downside risk. It provides me the opportunity to risk a little to make a lot. I thought this potential reversing pattern allowed me to consider a stop below the reverse head just below 226.50. Remember, I use the IWM's technicals to place trades in the TNA, not the TNA chart and technicals itself.
Gains are again much stronger in small (IWM, +1.71%) and mid caps (MDY, +1.67%) today vs. the S&P 500 (SPY, +0.59%). 10 of 11 sectors are higher, with only communication services (XLC, -0.33%) failing to move higher on the session. Value stocks are performing better, collectively, as utilities (XLU, +1.58%), financials (XLF, +1.45%), and industrials (XLI, +1.32%) lead the charge.
NVIDIA Corp (NVDA, +1.18%) reported better-than-expected results, but it's been a roller coaster ride for NVDA today. There was an initial gap higher, followed by a steep morning selloff, only to be followed by steady buying throughout the balance of the day as NVDA nears its session high. Snowflake (SNOW, +32.43%) easily beat its EPS estimate and buyers jumped on board from the opening bell. I did a quick eyeball review of SNOW's chart since inception in 2020 and I believe today is SNOW's best day ever. This is a stock to keep on your radar as jumps like this typically lead to further strength. This is also, by far, the most shares ever traded (51 million) since SNOW's inception as well.
Today has been another HUGE day for cryptocurrencies. Bitcoin ($BTCUSD, +3.75%) and etherium ($ETHUSD, +8.92%) have both been solid, but others like Solana ($SOLUSD, +7.50%) and XRP ($XRPUSD, +7.37%) have been excellent performers as well.
Finally, crude oil ($WTIC, +2.14%) has jumped back above $70 per barrel today, while the 10-year treasury yield ($TNX) is relatively flat at 4.42%, up less than 2 basis points.
Happy trading!
Tom