Stocks Hold Post-Breakout Support Level as China Anxieties Fade

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Stocks Hold Post-Breakout Support Level as China Anxieties Fade

Stocks held their ground last week as investors shrugged off concerns about a trade war with China.

The S&P 500 slipped 0.3 percent between Friday, November 15, and Friday, November 22. It the first negative week since the beginning of October. However the index managed to stay above 3,100 as traders bought the shallow pullback.

Economic data was pretty uneventful. There were also some news reports that Washington would fail to reach a trade deal with Beijing — only to be denied by Chinese state media. President Trump added on Friday morning that an agreement was “very close.”

Energy could be turning into a bigger story, with crude oil futures (@CL) hitting a two-month high on reports that OPEC will extend production cuts. Remember the oil cartel has a meeting on December 5-6, followed by Saudi Arabia’s huge Saudi Aramco stock sale.

S&P 500 chart with key levels, plus 8-day exponential and 50-day simple moving averages.
S&P 500 chart with key levels, plus 8-day exponential and 50-day simple moving averages.

Pessimists Turning Positive?

Just like the previous week, last week saw more noteworthy bears turning positive. Morgan Stanley (MS), which frequently predicted market corrections, said the global economy will accelerate in 2020. Goldman Sachs echoed that sentiment a few days later and recommended cyclical stocks that profit from quicker growth.

It was also the last big week of quarterly earnings reports. Target (TGT) flew 12 percent to another new high after beating estimates. That made it the biggest gainer in the S&P 500 last week.

Other retailers like Kohl’s (KSS), Macy’s (M) and Home Depot (HD) crashed on weak store traffic and sales. All these merchants are trying to reinvent themselves for the digital age. So far, Wal-Mart Stores (WMT) and TGT seem to be succeeding the most.

At the sector level, health-care stocks led the market again following a breakout the previous week. Biotechnology companies in particular surged.

Semiconductors, on the other hand, had the biggest drop after a big downgrade by UBS caused traders to take profits on the year’s best-performing industry group.

Target (TGT) chart with quarterly reports, plus 8-day exponential and 50-day simple moving averages.
Target (TGT) chart with quarterly reports, plus 8-day exponential and 50-day simple moving averages.

Busy Week Before Thanksgiving

This week has lots of economic data and is shortened by Thanksgiving on Thursday.

Nothing occurs during the trading session today, but Federal Reserve Chairman Jerome Powell will make a speech in the evening.

Tomorrow brings the Case-Shiller home price index, consumer confidence and new-home sales. Best Buy (BBY), Analog Devices (ADI), HP (HQ) and Autodesk (ADSK) report earnings as well.

Deere (DE) follows with its results the next morning. The rest of Wednesday is stuffed like a proverbial turkey as the holiday pushes events forward. They include durable-goods orders, revised gross domestic product, jobless claims, personal income and spending, pending home sales and crude-oil inventories.

Markets close early the day after Thanksgiving. It’s also is also “Black Friday,” the official start of the holiday-shopping season.

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