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Morning Commentary

LOTS OF SPUNK BUT STILL VULNERABLE

By Charles Payne, CEO & Principal Analyst
11/24/2021 9:48 AM

Yesterday was a remarkable session in more ways than one. First, crude oil moves higher, and the Energy sector spurts more than 3% on the same day President Biden announces the release of crude oil from the Strategic Petroleum Reserve.

S&P 500 Index

+0.17%

 

Communication Services XLC

 

-0.27%

Consumer Discretionary XLY

 

-0.73%

Consumer Staples XLP

+0.66%

 

Energy XLE

+3.07%

 

Financials XLF

+1.57%

 

Health Care XLV

+0.11%

 

Industrials XLI

+0.17%

 

Materials XLB

+0.10%

 

Real Estate XLRE

+1.06%

 

Technology XLK

 

-0.23%

Utilities XLU

+0.10%

 

There were enough winners on the S&P 500 to overcome hits to the three key growth sectors.

Market Breadth

It was a remarkable session that could have easily seen major indices slide into an abyss, as I wrote above. Instead, buyers appeared lifting the S&P 500 to a positive close and erasing more than half the intraday losses for the NASDAQ Composite. The Dow benefited from oil stocks and Financials out of the gate and never risked finishing lower.

Climbing Off Canvas

Session Low

Session Close

S&P 500

4,552

4,690

NASDAQ Composite

15,601

15,775

Russell 2000

2,303

2,342

Dow Jones Industrial

35,542

35,813

Market breadth improved, but the key metric to keep watching are 52-week new lows on the NASDAQ. It’s pure carnage for those names that are falling out of favor. While higher-risk equities are under the most pressure, there are some very impressive names taking it on the chin right now.

Market Breadth

NYSE

NASDAQ

Advancing

1,592

1,958

Declining

1,819

2,734

52 Week High

63

103

52 Week Low

177

528

Up Volume

2.41B

2.67B

Down Volume

1.97B

2.84B

New lows on the NASDAQ are mounting very similar to the bear market blast in 2020.

Fan Favorites Stumbling

It is a big test for individual investors and whether they can maintain diamond hands in many of their favorite names. I think they will with meme stocks, which have become a crusade. Still, many never bought into all those Initial Public Offerings (IPOs), knowing they were being played for liquidity events for founders that wouldn’t share access at much lower levels.

Lots of sizzling stocks are down a lot – many will come back strong while others will have to prove they have the right stuff without unique circumstances, such as Covid-19 or a restriction of movement.

I know the hit to the NASDAQ feels like a punch to the gut for many, but to put it in proper perspective, it’s a blip on the chart since the rally began from the ashes of March 2020. Still, relative strength is breaking down, and it could be vulnerable for a little longer. So, yes, it is a buying opportunity.

Happy Thanksgiving – how amazing we’ve made it this far and have so much further to go.

God Bless

Today’s Session

Major indices have been lower all morning but the needle moved back toward the flat line with a series of economic releases, but it was only a blip.

The most shocking headline is initial jobless claims diving to 199,000 – 71,000 to the lowest level since 1969.  This is great news for the country but doesn’t give Powell & Co a lot of room on holding down rates.  On that note this does not mean participation is improving and the Fed will continue to focus on that key employment metric.

Initial Jobless Claims

We are still waiting on personal income and consumption as well as new home sales.

Major Carnage in brick-and-mortar retailers, part of which can be traced to the spike in Covid19 cases in Vietnam, that will make some of them, but others have more pressing issues.

 


Comments
Happy Thanksgiving CP!

James Robert Davis II on 11/24/2021 1:56:31 PM
 

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