The Market Week Ahead: Nov. 19 – Nov. 23

 

Nov. 19  – Stocks took a hit last week as we saw the major indices decline sharply last Monday and face additional bouts of heavy selling throughout the week. There was slight optimism towards the end of the week as the market tried to regain some strength last Thursday and Friday. Unfortunately, that strength was short-lived. The markets opened lower to start the holiday week and faced heavy selling throughout the entire trading day. The market is generally sluggish the week of Thanksgiving as many traders are more focused on turkey, family and football. Historically, volume has been predictably low, dropping to nearly half and leading to unpredictable swings on the trading field.

The technology sector was hit hardest today with the Nasdaq being down over 3% from Friday’s close. Big-name FAANG stocks consisting of Facebook, Amazon, Apple, Netflix, and Google are all down sharply today, dragging down the entire sector in their wake. Apple lead the retreat after reports that the company cut production orders for the new line of iPhone’s. This of course hurts Apple, but also hurts the companies that provide components to the tech giant. Every member of FAANG is now considered to be in a bear market, as all of the stocks that make up the beloved group have seen declines of over 20% from their one-year highs, sending traders to seek safety and security elsewhere. 

Theresa May’s Brexit deal hangs in the balance as concerns continue to mount and a vote of no confidence is gaining traction. Italy’s budget plan for 2019 draws concern from the European Union, further escalating tensions in Europe.

S&P 500

The S&P 500 dropped 1.7% today from Friday’s close. As Thanksgiving day draws near and volume thins, we would like to see the S&P hold at its support level near 2,680. It has additional support around 2,640 and 2,660, but holding the 2,680 level is key if we expect any kind of bounce in the market in the near future. Should the index fall below this key level of support, we could see the S&P continue to drop significantly before rebounding.

Economic Events this Week

The NAHB and Wells Fargo Housing Market Index dropped to 60 points in November. Home buyer sentiment is down as rising interest rates and affordability issues all become a concern. Housing Starts and Building Permits will be closely watched as they can be leading indicators of economic activity. Existing Home Sales is a lagging indicator, as it tends to react following changes in interest rates.

  • Monday
    • 10:00 a.m. – NAHB Housing Market Index
  • Tuesday
    • 8:30 a.m. – Housing Starts
    • 8:30 a.m. – Building Permits
  • Wednesday
    • 8:30 a.m. – Durable Orders
    • 8:30 a.m. – Durable Goods
    • 10:00 a.m. – Existing Home Sales
    • 10:30 a.m. – Crude Inventories
    • 12:00 p.m. – Natural Gas Inventories

Earnings Reports this Week

Retail dominates the earnings landscape on this short holiday week with L Brands, Urban Outfitters, Lowe’s, The TJX Companies, Target, Ross, Copart, Gap, and Foot Locker all reporting. Manufacturers such as Deere & Company, Medtronic PLC, and Spectrum Brands Holdings will also be reporting.

Monday:

  • Before the bell: JD, SPB
  • After the bell: INTU, A, LB, NUAN, URBN

Tuesday:

  • Before the bell: MDT, LOW, TJX, TGT, ROST
  • After the bell: ADSK, CPRT, KEYS, GPS, FL

Wednesday:

  • Before the bell: DE
  • After the bell: SQM

Sector Analysis 

The market hasn’t been great lately, so the longer lists are all on the downside again this week.

Strong Sectors past Month

There isn’t much up 5% or more in the last 20 trading days:

  • Volatility
  • Solar

Weak sectors past month

There’s a lot of red out there if you look at the last 20 days. These sectors are down 5% or more in the last 20 trading days:

  • Oil Services
  • Oil & Gas Exploration
  • Biotech
  • Commodities
  • Internet
  • Energy
  • Metals & Mining
  • Technology
  • Robotics

Strong sectors past five trading days

These sectors are up 3% or more in the last five trading days.

  • Volatility

Weak sectors past five trading days

These sectors are down 3% or more in the last five trading days.

  • Internet
  • Retail
  • Technology
  • Consumer Discretionary
  • Cyber Security
  • Oil & Gas Exploration
  • Biotech
  • Medical
  • Oil Services
  • Semiconductors
  • Robotics 
  • Agribusiness

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