Uncategorized, Weekly Update

Bulls increasingly taking control

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Published November 29, 2019


We have recently seen positive movement in several new areas of the stock market.  See below the note from U.S. Global Investors on the possible bottoming in Europe.  Following that, we have a couple of charts showing new breakouts in the U.S. market.  The stock market continues to show signs it will embrace its seasonally strong holiday period.

Here is the brief on Europe:

“Economic conditions in Europe appear to have found a bottom as doomsday Brexit predictions have not panned out; trade tensions have eased; and a fresh round of monetary stimulus has begun.

In a note to investors dated November 25, Evercore ISI’s Ed Hyman shared a series of charts showing that business and consumer sentiment in Europe has improved for the past two to three straight months, indicating it may be time to talk to your clients about participating.

Retail sales have improved in the eurozone generally and the U.K. specifically. The CBI Distributive Trends survey, which measures sales volumes from a year earlier, rose to negative 3 percent in November, the highest balance in seven months.”

Is Europe improving?

On the domestic U.S. front, we’ve seen a couple of solid breakouts recently.  First, the healthcare sector, which has sprung to life after a year of back-and-forth movement.

Health Care sector breakout

And the update of our recently discussed chart of small-cap stocks, showing this week’s breakout from a nearly two-year consolidation.  A couple of weeks ago, we asked the question whether this group was finally going to break out of the range.  The current answer is a solid “YES!”.

Small-cap stocks breakout

The stock market is showing bullish tendencies … for now.

Market Update

Stock investors continued to take an optimistic view in this holiday-shortened week. Stocks popped higher by +0.8% Monday on encouraging words from Chinese officials regarding the ongoing trade talks. Also contributing to the buying mood was a couple of large deals – one in the high-end consumer space with Europe’s LVMH buying Tiffany; and one in the retail brokerage arena with Schwab buying TD Ameritrade. Tuesday added another +0.2% with retailers rising on an increased holiday shopping outlook from Best Buy and gains in real estate sector shares. Wednesday’s quiet pre-Thanksgiving session nonetheless saw indexes gain ground once more. The S&P 500 rose +0.4% Wednesday as third quarter GDP was revised upward. Friday’s half-day trading session gave back some of the week’s gains with a -0.4% result. President Trump’s signing of a bill seeming to support Hong Kong’s pro-democracy protesters was viewed as perhaps hindering progress on trade with China.

For the week, stocks resumed their upward moves after a one week pause. The S&P 500 added +1.08% to close out a solid month of November. The Nasdaq 100 (QQQ) rose +1.62%. The small-cap Russell 2000 index (IWM) broke out of its recent trading range with a +2.24% weekly gain.

Warm wishes and until next week.

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