Wednesday, December 1, 2021

Morning Note: Sudden Sanguineness, Or..?. And a Look at the Charts

Whether the positive market action this morning implies sudden sanguineness around the new variant, or comports with our view that -- change of tone aside -- the Fed has backed itself into a corner that really doesn't allow it to come out swinging on inflation, or the fact that on average Decembers are very good (simple seasonality), this morning's bounce in equities makes some sense.

Whether or not it holds of course, against sharply rising yields (tech stocks would be your worry here), remains to be seen.

The very short-term SP500 price action looks relatively constructive (the signals in panels 2 and 3 [relative to the shape of the price action] of the first two charts)...

Here are those 60 and 120 minute charts we often explore on our technical videos:

With regard to the daily chart, however, while bouncing back above the 50-day moving average (red line) this morning is a positive, the S&P really needs to break above that down trend line (the past few days of lower highs and lower lows action). And that "engulfing candle" (furthest to the right in that second red rectangle) -- not a good look at the top of a trend -- really needs to get taken out.

On another note, here's StoneX's Vincent Deluard seeing what we've been seeing (and illustrating herein) with regard to Nasdaq breadth the past few weeks:

Nothing conclusive here folks, just technical developments we're keeping our eyes on...

Asian equities rallied overnight, with 12 of the 16 markets we track closing higher.

Europe's bouncing nicely as well so far this morning, with all but 4 of the 19 bourses we follow in the green, as I type.

US major averages are nicely green across the board: Dow up 399 points (1.15%), SP500 up 1.52%, SP500 Equal Weight up 1.97%, Nasdaq 100 up 1.35%, Nasdaq Comp up 1.37%, Russell 2000 up 2.53%. 

The VIX sits at 22.95, down 15.59%.

Oil futures are up 3.48%, gold's up 0.76%, silver's down 0.47%, copper futures are up 0.74% and the ag complex is up 0.13%.

The 10-year treasury is down (yield up) and the dollar is down 0.17%.

Led by MP (rare earth miner), banks, metals miners, oil services and carbon credits -- but dragged by silver, AMD (chip maker) and treasury inflation protected securities -- our core portfolio is up 1.11% to start the session.

"To put the question in general terms would be comparable to the question posed to a chess champion: “Tell me, Master, what is the best move in the world?” There simply is no such thing as the best or even a good move apart from a particular situation in a game..."

--Victor Frankl 

True in life (the meaning of which is what Frankl discusses in this quote), in chess, and so true in investing! 

Have a great day!

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