WASHINGTON – After enduring last week’s general stock market gloominess – often matched by the weather here in The Swamp and its environs – I logged on to our accounts with some trepidation Monday morning. And what a surprise. Mr Market decided to resume his inclination to party hearty after the 9:30 a.m. opening bell rang in the action. As of the noon hour, we remain squarely within a convincing Turkey Week rally on Wall Street.
More on Monday’s Turkey Week rally
CNBC provides the stats. Plus the usual tedious bit of NBC-style political color.
“Stocks rose on Monday as Wall Street looked for the market’s rally to record highs to resume amid increasing expectations that China and the U.S. will reach a so-called phase one trade deal.
“The S&P 500 and Nasdaq Composite hit record highs as they rose 0.6% and 1.2%, respectively. The Dow Jones Industrial Average climbed 126 points, or 0.5% and remained about 0.3% below its all-time high.
“President Donald Trump tweeted about the record, saying: ‘Enjoy!’
“Tech was the best-performing sector in the S&P 500, rising 1.2%. Nvidia led the sector higher with a 4.2% gain. Intel’s 1.6% advance led the Dow higher. The Nasdaq was lifted by a 1% rise in Apple shares while Amazon traded 1.6% higher.”
Last week’s lame market stats
Meanwhile, over at my favorite preferred stock research site, Innovative Income Investor’s Tim McPartland touches on last week’s aimless market stats, while noting some positive news on interest rates and the Fed balance sheet.
“The Standard and Poors 500 moved in a range of 3091 to 3127, about a 1% range, before closing [last] week at 3110–around a 1/2% loss for the week.
“Interest rates, as measured by the 10 year treasury, stayed pretty tame last week, moving in a range of 1.73% to 1.85 before closing the week at 1.77%.
“The Fed balance sheet actually fell last week by $17 billion–this is the first fall in the balance sheet since 8/28/2019.”
Bold text above via the site.
Why Thanksgiving Week trading action can be weird
True, today’s Turkey Week rally gives me a warm feeling. But, as I watch our portfolios get juiced, overconfidence is not an option. That’s because trading action during Thanksgiving week can be a little strange for two important reasons.
- It’s a holiday shortened trading week, with markets closed on Turkey Day Thursday and open for trading Friday only until 1 p.m. ET for most trades.
- Given the massive amount of cross-country travel for this holiday, a lot of market plays, both big and small, will likely not be on their computers for a few days, leading to low volume and high volatility.
For the latter reason, during each individual trading year, your portfolio’s mileage may vary this week. But, with Congress mostly taking an actual vacation (as opposed to the House of Representative’s nearly year-long vacation, save for its single idiotic obsession), and with an official US-China trade meeting yet-to-be-scheduled, typical market-moving headlines will mostly float in suspended animation. Which again leads to low volume and unpredictability.
In other words, we could get unpredictably weird trading action this week on increasingly low volume. That means today’s so-far-great market rally, while being welcome fun, may also prove to be of short duration.
A political and market mystery: How does President Trump award the wrath of the Gods of Hubris?
Which is why I wish the President wouldn’t have launched that cheery tweet duly noted in the CNBC report. This sort of thing signals overconfidence. This, in turn usually launches the retributive Gods of Hubris. It inspires them to descend upon us all, robbing us of joy and wealth. Strangely, however, Mr. Trump has tended to avoid the almost inevitable fate accorded to all who indulge in hubris. Again and again. You don’t suppose he could have bribed the Gods of Hubris, do you? (Cue high violin attack motif from Psycho.) And if so, could that be a high crime and misdemeanor? (Oracle of Delphi, phone home.)
McClellan Oscillator tells us…nothing this week?
On the technical front, my favorite rally-crash indicator, the McClellan Oscillator, wasn’t much help during the week just past. The trend has generally been jaggedly negative lately. But we have yet to hit the extreme overbought or extreme oversold levels we’d need to either get a big crash (improving buying chances for those with cash to put to work). Likewise, we’ve failed to hit a low-enough oversold number to trigger a fantastic rally. As in the chart below, from the free portion of Stockcharts.com (to which I subscribe, BTW).
So Mr Market meanders around with a slight negative bias. Bills likely find this unfortunate as they see this happening during the end-of-year’s traditionally positive seasonality. We’ll have to pay attention and see how this resolves. But likely after this holiday-shortened, traditionally weird trading week.
Adjusting the portfolio mix during a Time of Confusion
Right now, I’m trying to get at least one promising big cap into our portfolio mix. But I consider most likely candidates too pricey right now. Big banks and big oil (believe it or not) are in our sights right now. But again, they seem overpriced, too.
Some services are currently recommending mid-cap stocks. But we probably have enough of these as well. I’d love to pick up at least a few shares here and there in the Materials and Industrials sectors. But most of these companies currently fail to thrive – at least stock-wise – even though a lot of advisors have them on recommended lists. Good companies in these sectors are still awfully good buys.
But until we get some resolution on things like the US-China trade deal, the Democrats’ bull-crap impeachment obsession, a finalized FY 2020 US government budget, and (hello, Dems?) the key USMCA US-Mexico-Canada trade agreement that tears up the hated NAFTA, none of these YUGE economic questions will get answers.
So what do we do today? Maybe we just kick back and enjoy our Turkey Week rally. At least for today. And also look at a few candidate stocks to buy as they meaninglessly sink to lower prices during this likely holiday and travel affected trading pattern.