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Holiday Week trading action looks like a real turkey Tuesday

Written By | Nov 23, 2021
Holiday Week trading action, confused mr market, random walk

Image by PixLoger from Pixabay. Public domain, CC 0.0 license.

WASHINGTON – As Monday morning US stocks opened strongly in the green, it looked like Mr Market might decider take a break from last week’s bloodbath. In other words, last week’s selloff seemed like it might take a breather this Holiday Week. One bit of good news: The Biden Junta finally decided to reappoint current Fed Chair Jerome Powell for another term. The bad news: Biden Junta finally decided to reappoint current Fed Chair Jerome Powell for another term. We’ll take a look at this paradox in just a moment. First, a quick look at Monday’s weird trading action. It looked like Wall Street was the real turkey. And sadly, that turned out to be the template for Tuesday trading action thus far.

A nice Monday rally goes terribly wrong

Stocks opened up sharply across the board Monday, particularly in the tech sector. But oils also reversed last week’s nasty slide. At least a little bit. The Dow, in fact, which also suffered greatly last week, started the trading day off by doing a happy dance.

But by the end of the trading day, particularly during the last hour of trading, Wall Street’s collective Smiley Faces took a header. Up a couple hundred points earlier, the Dow barely closed in the green, up just 17.27 points (+0.05%) on the day.

It’s Clobberin’ Time for the NAZZ once again

The NASDAQ, whose major components soared Monday morning, got utterly clobbered later in the day, closing off a whopping 202.68 % for a negative 1.26% beating on the day. We’d actually taken a chance and bought a tiny number of shares in fast-recovering Micron (NASDAQ: MU) Monday morning, figuring it might get hit. At which point we’d buy a few more shares.




Unfortunately, MU reversed – hard – so we held off on that secondary buy. We’re already aware that any kind of trading or investment activity undertaken Thanksgiving Week can be iffy, given the traditionally low volume of trading. But we jumped the gun, and paid a small price for it – one we needn’t have paid.

We’ll eventually buy more shares of this premiere memory chipmaker. But maybe next week.

Why did stocks slump so suddenly?

Aside from that low volume issue, it was the bad news part about the Powell reappointment that started to bug those traders still playing the game today while many traders had already hit the road. CNBC provides a pretty good explanation, at least in part.

“Stocks slumped in afternoon trading on Monday, reversing an earlier rally that came after President Joe Biden picked Jerome Powell to continue to lead the Federal Reserve over Fed Governor Lael Brainard…

“The S&P 500 and Nasdaq Composite were both negative after hitting intraday records earlier in the session.

“Powell, a former private equity executive, slashed interest rates to near zero and implemented emergency asset purchases in March 2020 to help backstop the market during the first wave of the Covid-19 pandemic, helping the financial system to remain operational during a sharp slowdown in economic activity. He also [led] a landmark re-evaluation of the Fed’s inflation targeting framework during the Covid crisis.

CNBC analysis of Holiday Week trading action continues

“The move assuaged investors worried about switching central bank chiefs while the country’s economy is trying to emerge from the Covid pandemic and battle inflation levels not seen in three decades….

“Powell’s renomination comes as inflation has exceeded expectations in recent months, leading the Fed to walk back its predictions that the rise in prices that accompanied the reopening of the economy would be “transitory.” Some critics have said the Fed is waiting too long to tighten monetary policy….

“Bank stocks and Treasury yields moved higher after the White House announced the Fed decision. Shares of JPMorgan rose 2.7% while Morgan Stanley rose more than 3%. The move higher in rates appeared to take a bite out of some tech stocks, whose future earnings are less attractive to investors when yields are higher.”

But wait! There’s more on Holiday Week trading troubles (from us and ZeroHedge)

Ah, yes. But… Last week’s nasty rumor, the one that quickly undercut the soaring price of crude oil, resurfaced later in the day. Namely, semi-reliable sources once again promised that the Biden Junta was ready to announce a big release of oil from the US Strategic Petroleum Reserve. Even worse (for oil prices… but better for consumers), a few other countries might have agreed to get on board, releasing oil from their own reserves, as ZeroHedge duly notes, with an ominous edge.



“Shortly after suggestions that OPEC+ might retaliate [against the US move] if, Bloomberg reports that, according to people familiar with the plan, President Biden is preparing to announce a release of oil from the nation’s Strategic Petroleum Reserve in concert with several other countries as soon at Tuesday.”

In other words, OPEC seems to be threatening that they’ll cut their alleged plans to increase production … soon… if the US et. al. make a first move. OPEC loves those high prices, of course, which the Trump Administration eliminated in a matter of months.

Examining the domino effect

Nevertheless, the very hint of a sudden “oversupply” of oil clobbered oil stocks all of a sudden, even though the stock market’s Grim Reaper didn’t hit all of them.

At this point, all the dominoes fell, including the previously happy dancing techs. Even Amazon (NASDAQ: AMZN) got seriously hammered, even though it’s technically in the Consumer Discretionary zone. Seriously hammered? How about a negative $103 PER SHARE at Monday’s close. We have a few of these, and it’s time for a stiff one at dinnertime. That hurts.

McClellan Oscillator close to predicting a rally. But when? Maybe not this Holiday Week

Last week’s closing McClellan Oscillator gave us a bit of hope that we’d see a little more robust action this week, given the fact that this indicator is now in the “extreme oversold” range. This usually means at least an imminent dead cat bounce for Mr Market isn’t far away. Well, could be that we need to get more oversold. But it’ll be a couple more hours before this afternoon’s oscillator chart gets calculated, so we’ll have to wait and see.

UPDATE:

The Monday COB Oscillator chart showed a tiny, unimpressive uptick when it was issued early Monday evening. That could mean our big rally / dead cat bounce could face a holiday delay shifting it, perhaps, to early next week. Stay tuned.

More on that possible rally

Although a real rally looks imminent, as long as oil price nonsense looms without resolution, things will remain very iffy on Wall Street. Particularly since the Jerome Powell bad news part unfolds: the greater likelihood of higher interest rates sooner, as today’s price jump in 10-year US Treasurys apparently predicted. (Leftists and AOC’s money-printing fanatics were hoping for the more dovish [and leftist] Lael Brainard to get the nod.)

All in all, it’s a lot to sort out during a holiday shortened trading week during which many traders and investors aren’t involved in the game. Again, we’ll just have to wait and see.

Tuesday midday Holiday Week trading action update

Not a lot has changed in US markets as of 2 p.m. ET Tuesday, November23. The Dow is nicely up, but that could change. Most oil shares continue to recover from last week’s pounding, but that could change, too, given the administration’s latest – and foolish – attempt to tamp down fuel price inflation in the worst possible way. They are, as predicted, making a substantial drawdawn from the US Petroleum reserve, in coordination with a few other countries.

Hey, Slow Joe, howzabout just letting the US and Canada finish the Keystone XL Pipeline, ceasing support for Michigan Governator Whitmer’s idiotic dedication to shutting down another pipeline, this one coming down from Michigan’s UP, and scotching that stupid ban on fracking on Federal lands. That would take care of things, wouldn’t it? Oh, yeah, AOC and The Squad would be pissed. Never mind.

Oddly, oil prices are up again Tuesday. But maybe they haven’t gotten the latest news on that Oil Reserve release program. Or maybe OPEC is ready to retaliate. Next move: theirs.

Tuesday stocks still looking mediocre as we begin to head for the closing bell

On the other hand, most tech stocks, plus Amazon, are getting hammered today, putting them back in the “For Sale” mode these stocks have endured for most of the fall. Again, hard to say why, as chip shortages, apparently, may be on the verge of easing.

But, as we said in an earlier article, Thanksgiving Week trading action, due often to a lack of volume, can be tricky and strange. And so it is Tuesday. We’re holding our own. Hope you are, too!

 

 

Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17