Stock Market Today: November 30th - December 4th, 2020

Welcome Stockaholics to the trading week of November 30th!

This past week saw the following moves in the S&P:


Major Indices End of Week:




Major Futures Markets on Friday:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:

• Monday

9:45 a.m. Chicago PMI

10:00 a.m. Pending home sales

• Tuesday

Monthly vehicle sales

9:45 a.m. Manufacturing PMI

10:00 a.m. ISM Manufacturing

10:00 a.m. Construction spending

12:00 p.m. ECB President Christine Lagarde at Atlantic Council, introduced by former Fed Chair Janet Yellen

1:15 p.m. San Francisco Fed President Mary Daly

• Wednesday

8:15 a.m. ADP employment

9:00 a.m. New York Fed President John Williams

10:00 a.m. Philadelphia Fed President Patrick Harker

1:00 p.m. New York Fed’s Williams

2:00 p.m. Beige book

• Thursday

8:30 a.m. Initial jobless claims

9:45 a.m. Services PMI

10:00 a.m. ISM nonmanufacturing

• Friday

8:05 a.m. New York Fed’s Williams

8:30 a.m. Employment report

8:30 a.m. International trade

9:00 a.m. Chicago Fed President Charles Evans

10:00 a.m. Factory orders

 

Stocks Give Thanks For Fed Liquidity As Dollar, Gold, & Bitcoin Dumped
Greed, Greed-er, and Greed-est...



Source: CNN

This level of extreme greed didn't end well last time.



As a reminder, the recent vaccine headlines have put global and european-specific stock markets on track for their best month ever...



Source: Bloomberg





Source: Bloomberg

The Dow broke above 30k for the first time ever early in the week but was unable to maintain it...



It's not the economy; it's central bank liquidity, stupid!



Source: Bloomberg

Energy stocks continued their massive surge this week (though faded a little today) as Utes lagged...



Source: Bloomberg

And as we noted earlier, Tesla surpassed Berkshire Hathaway in market cap for the first time ever...



Source: Bloomberg

VIX flash-crashed intraday below 20 - its lowest since February...



As traders dumped puts in favor of calls by the most since 2010...



Source: Bloomberg

Treasury yields fell today after rising into Thanksgiving. 30Y remains up around 5bps on the week, 2Y unch...



Source: Bloomberg

10Y yields rolled over at pre-election-spike levels (around 90bps) once again, shrugging off any vaccine growth hopes...



Source: Bloomberg

The dollar tumbled for the 3rd week in the last 4, having plunged almost non-stop since the election...



Source: Bloomberg

...closing at its weakest vs its fiat peers since April 2018 (and unchanged since Jan 2015)...



Source: Bloomberg

Cryptos started the week strongly with Bitcoin closing at a record high, but ended weak with ETH flat and BTC -10% (and yes Ripple was up 140% on the week on Tuesday!)...



Source: Bloomberg

Bitcoin fell from $19500 to $16500...



Source: Bloomberg

On the week, copper and crude surged as PMs were purged...



Source: Bloomberg

Gold and Silver were monkeyhammered this morning (coinciding with a forceful flash-crash in VIX)...



Gold is heading for its 3rd straight weekly decline, its 4th straight monthly drop and worst month since Nov 2016, breaking (and closing) below its 200DMA...



Source: Bloomberg

Finally, some historical context from Michael Markowski. Two stock market sentiment anomalies have increased the probability of a correction near term.

The two anomalies are:

• Thanksgiving Melt Up Anomaly. The average S&P 500 gain for 12 of the past 14 ten-day periods concluding November, was 3.5%. The only two exceptions, 2015 and 2018, were preceded by significant market corrections.
  
  
• Bullish Sentiment Anomaly. Currently, there is a high probability for the S&P 500 to decline by 12.7%. Such would be from its recent 2020 high and would conclude by December 20, 2020. Based on the previous behavior, there is a 66% probability the S&P 500 could continue its decline in 2021.
  

The Thanksgiving Melt Up Anomaly is now driving the S&P 500 to a higher November all-time high.

The Bullish Sentiment Anomaly is the cause of a violent correction for the S&P 500 to begin in early December 2020.

The chart below depicts the four 45% to 59% Bullish sentiment readings which occurred near the all-time highs for the S&P 500. (2018 to November 13, 2020)



Within five weeks of the three prior Bullish Sentiment Anomalies occurring, the S&P 500 declined by a minimum of 9.7%. Two of the three total declines depicted in the table below were more than 100% greater than the five-week drops.



There exists a risk of decline from November 13, 2020, through Christmas Day. Such is likely to occur precisely because no one expects it to.

Trade accordingly.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2020-



S&P sectors for the past week-

 

December Almanac: Small Caps Have Shined

December is now the number three S&P 500 and Dow Jones Industrials month since 1950, averaging gains of 1.5% on each index. It’s the top Russell 2000 (1979) month and third best for NASDAQ (1971) and Russell 1000 (1979). In 2018, DJIA suffered its worst December performance since 1931 and its fourth worst December going all the way back to 1901. However, the market rarely falls precipitously in December and a repeat of 2018 is not highly likely. When December is down it is usually a turning point in the market—near a top or bottom. If the market has experienced fantastic gains leading up to December, stocks can pullback in the first half of the month.

In the last seventeen election years, December’s ranking changed modestly to #2 DJIA, #5 NASDAQ, but S&P 500 remains #3. Small caps, measured by the Russell 2000, have had a field day in election-year Decembers. Since 1980, the Russell 2000 has lost ground just once in ten election years in December. The average small cap gain in all ten years is a solid 3.0%. The Russell 2000’s single loss was in 1980 when the Prime Rate was 21.5%.

Sector Weights Rising and Falling
Fri, Nov 27, 2020

For most of the past year, one significant trend on a sector by sector basis has been the outperformance of sectors like Technology and Consumer Discretionary. The relative strength lines of these sectors have consistently shown outperformance versus the rest of the S&P 500 as a whole, but since August, other sectors have begun to take the wheel. As we noted in today's Sector Snapshot, just about every sector has had a banner month in November with some of the biggest month to date rallies of the past 30 years, but some sectors have seen much larger returns than others. One of the best examples of this has been Energy which has risen over 35% in November. Similarly, Financials has risen an astounding 19.5% this month compared to more modest but still significant rallies of around 10% from Tech and Consumer Discretionary. Given those large degrees of outperformance, the relative strength lines of Energy and Financials have taken a sharp turn higher in recent weeks. Similarly, they have seen a turnaround in their weightings in the S&P 500 as shown in the charts below.

Over the past three months, the Financial sector has gained a full percentage point weighting while the Technology sector has lost 1.36 percentage points with a decline in weighting in three straight months. For Financials, that is the largest gain in weighting in a three month span since January 2017. For Tech, outside of the reshuffling in 2018 that saw a large share of its weight change into Communication Services, the last time the sector lost this much or more in weighting in three months was November of 2008. Prior to this recent string of losing weight over the past three months, Tech had seen weight gain in every month from October of last year through August. Even though the weight loss has been significant, it has only put a dent in the increased share of the entirety of the past year as the sector's weight is only back down to where it was in May.

Similarly, looking at the other sectors, while Financials have added a full percentage point in share over the past few months, that follows nine months of declines running from last December through August. That brings the sector's weighting back above 10% in the S&P 500, but that is only at the highest level since March. Similarly, Materials and Industrials have also seen their weights rise for three and four months in a row, respectively. As for Energy, the 0.44 percentage point gain in November is set to snap six straight months of declines; the longest such streak since at least 1990. As with Financials, that turn around this month has only put a dent in the longer term trend of weight loss as Energy's weighting is now only back to its highest level since July. Opposite of Energy, Consumer Discretionary is on pace to lose weight for the first time since March.



A Month to Be Thankful For
Wed, Nov 25, 2020

Heading into today with just three trading days left in November, the average Russell 1,000 stock was up 17.44% month to date. As shown below, not one of the five largest stocks is up even close to 17% on the month. For a market that had recently been driven higher in large part because of the five mega-cap Tech names, November has seen the mega-caps stall a bit while the rest of the market has seen broad participation. This is the type of breadth that market bulls have been waiting and hoping for.

Of the 35 largest stocks in the Russell 1,000, Tesla (TSLA) is up the most so far this month with a gain of 43%. The other big winners include Chevron (CVX), JP Morgan (JPM), Bank of America (BAC), Disney (DIS), and Comcast (CMCSA). Not one stock in the top 35 is down on the month, but the ones that are up the least are Netflix (NFLX), Procter & Gamble (PG), Amazon (AMZN), and Home Depot (HD).



Looking at sectors, the average Energy stock in the Russell 1,000 is up 46% month-to-date but still down 27% year-to-date. Three other sectors have seen their stocks average MTD gains of more than 20%: Financials, Industrials, and Real Estate. Stocks in the Health Care and Utilities sectors are up the least on an average basis this month, but even these underperformers are still up more than 5%.



There are 37 stocks in the Russell 1,000 up more than 50% so far in November. Below is a list of this month's biggest winners. Coty (COTY) and Nordstrom (JWN) stand out the most with gains of more than 100%, followed by Spirit AeroSystems (SPR), Occidental Petroleum (OXY), Diamondback Energy (FANG), and Empire State Realty (ESRT). The list of biggest winners this month is full of names that got hit hardest by COVID in areas like energy, travel, retail, and real estate. Notably, while these stocks are up an average of 68.5% in November, they're still down an average of 23% on the year. On a median basis, they're down even more year-to-date at -31.55%.



Biden - Best Since Reagan
Tue, Nov 24, 2020

The market started off November on a positive note, and even after the election has continued to add to its gains. Through the close today (11/24), the S&P 500 is up 7.90% since the close on Election Day. Relative to every other Presidential election since the beginning of the S&P back in 1928, the three-week performance of the S&P 500 following this Election Day ranks as the second-best of all time. It came down right to the wire, but the only other US President to see a stronger market reaction to their election (or re-election) was Ronald Reagan in 1980 (7.97%). Behind Reagan and Biden, the only other Presidents where the S&P 500 experienced an upside move of 5%+ in reaction to their elections were Hoover in 1928 and Clinton in 1996.

On the downside, the most negative reaction of the market in the three weeks after Election Day was the 14.75% decline following President Obama's election in 2008. In addition to Obama, the S&P 500's four other three-week downside moves of more than 5% came after the elections of Truman in 1948, the election of George W Bush in 2000 (although at the time it was unknown who was the winner of that election), the election of Franklin D Roosevelt in 1932, and Dwight D Eisenhower's re-election in 1956.

In aggregate, the S&P 500 hasn't historically responded all that great in the three weeks after a Presidential election. For every one since 1928, the median return of the S&P 500 in the three weeks after Election Day has been a gain of just 0.35%. Breaking out returns by party, in the three weeks after a Democratic candidate is elected, the S&P 500's median performance is a decline of 1.11% compared to a median gain of 3.04% when a Republican is elected.



DJIA 1,000 Point Thresholds
Tue, Nov 24, 2020

What a wild year 2020 has been! With the DJIA closing above 30,000 today, it was the second first-time upside break of a 1,000 point threshold this year. While there have only been two new upside crosses of 1,000 point thresholds, due to the sharp pullback in March from the pandemic that briefly took the DJIA below 19,000 on a closing basis, there have actually been 12 different upside 1,000 point thresholds at some point in the year.

The table below lists the first time that the DJIA closed above each 1,000 point threshold in its history along with the total number of times the index has crossed that level on a closing basis throughout history. The thousand point level that has seen the most crosses on a closing basis was 11,000 (87 crosses) while 10,000 ranks second at 67.

Obviously, the higher the DJIA goes, the less impactful a move of 1,000 points becomes. At current levels, 1,000 points represents just 3.3%, which is really nothing more than a very bad day in the market. Given the diminishing impact of 1,000 points in the DJIA these days, their significance declines. Even still, the twelve new 1,000-point crosses since the 2016 election has given the President (who has publicly discussed the stock market more than any other President in history) plenty of ammunition to tweet about.



30,000 Reasons To Be Thankful

As 2020 winds down, it has been an extremely tough year on all of us. Still, there are many reasons to be thankful and today we will share some reasons investors should be thankful.

Stocks have had one of the largest reversals ever in 2020, something to be thankful for. In fact, this could be the first year ever to see the S&P 500 down more than 30% peak-to-trough and finish higher.



We should also be thankful that Congress was split in 2020, likely marking the 11th consecutive year the S&P 500 gained under a split Congress. Gridlock is good they tell us and that very well could be true yet again.

Want something else to be thankful for? We likely will have a split Congress for another two years after the two Georgia runoffs are official.



Let’s be thankful that it is looking like stocks once again will be higher the year a President is up for re-election. In fact, you have to go back to FDR in the ‘40s the last time the S&P 500 was lower for the year when a President was up for re-election.



Let’s be thankful that the fastest bear market in history (only 16 days) is officially a thing of the past.



We are thankful that we are in a new bull market, which if history plays out once again, could have a lot of life left to it. In fact, the average bull market has lasted more than five years.



“Let’s be thankful that the huge move off the March lows was a major clue of more strength,” explained LPL Financial Chief Market Strategist Ryan Detrick. “We noted at the time (many different ways) that the enormous move we saw off the March lows likely suggested significantly higher prices, while many ignored the market signals and instead looked for a re-test for months on end.”

The 20-days off the March lows was the second best 20-day rally ever and sure enough, the returns have been very strong.



We are finally seeing many stocks participate in this bull market, another reason to be thankful. In fact, the Value Line Arithmetic Index recently made new all-time highs. This index is a great look at what the ‘average’ stock is doing and is a sign that this move isn’t being led by just a few large cap tech stocks.



Let’s be thankful that the NYSE Cumulative Advance/Decline line is at new highs. This looks at how many stocks are going up versus down and new highs are a sign of very healthy participation.



Emerging markets have started to turn higher and we are thankful that this group could be on the verge of a major breakout to new highs, clearing their peak from 2007. As we move into ’21, this is one group we think could continue to do quite well for investors.



Global investors should be thankful, as the MSCI Global Index broke out to new highs as well, suggesting this rally isn’t only about the US anymore.



We upgraded our view on small caps in September and the Russell 2000 Index is currently on pace to have its best monthly return ever. Investors should be thankful that this group is finally participating, as there are many more small caps than large caps, another sign of improving breadth, while small caps are also more domestic by nature and could be suggesting a strong US economy next year.



Investors should be thankful for the incredible strength around the election, as the S&P 500 gained more than 1% four consecutive days. This is extremely rare, yet, extremely bullish going out a year.



As we showed in Frothy Sentiment Rides Bullish Technicals, the huge number of stocks in the S&P 500 making new monthly highs should make bulls quite thankful.



Earnings are expected to see a major bounce back, as the global economy gets back online next year, making many investors quite thankful.



Economic forecasts may not develop as predicted.

As shown in the LPL Chart of the Day, the final reason to be thankful? Dow at 30,000!

 

Here are the current major indices pullback/correction levels from ATHs as of week ending 11.27.20-


Here is also the pullback/correction levels from current prices-


Here are the current major indices rally levels from correction low as of week ending 11.27.20-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for November 27th, 2020
Video from AlphaTrends


ShadowTrader Video Weekly 11.29.20
Video from ShadowTrader

 

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Here are the most anticipated Earnings Releases for this upcoming trading week ahead.

***Check mark next to the stock symbols denotes confirmed earnings release date & time***

Monday 11.30.20 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

Monday 11.30.20 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

Tuesday 12.1.20 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

Tuesday 12.1.20 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

Wednesday 12.2.20 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

Wednesday 12.2.20 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

Thursday 12.3.20 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

Thursday 12.3.20 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

Friday 12.4.20 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

NONE.

Friday 12.4.20 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

NONE.

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($ZM $CRM $HOME $CRWD $DOCU $DG $OGI $MOMO $MRVL $ATHM $NJR $ADNT $BIG $SPLK $BNS $KR $ZS $OKTA $BOX $CLDR $BMO $MIK $SWBI $JFIN $HPE $TD $VEEV $FIVE $SNOW $ULTA $EMKR $NTAP $DLTH $RY $ZUO $GBDC $ESTC $SIG $BBW $NOAH $SNPS $CBRL)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning November 30th, 2020 <-- click there to view!