Swing Trading Strategies & Stock Picks Since 2003

Weekly Market Commentary- (Nov 16-Nov 20)

DJIA Industrial Average

Open: 10270.47

Close: 10318.16

Change: 47.69(0.5)

RSI: 76.2

MACD: 146.88

Strategy: The stock indices have been showing signs of tiring out, and corrections are coming in the market, every time when they record strong gains for four to five sessions. Traders should regularly book profits at higher levels.

Highlights of week:

·        The week remained largely range-bound, since erratic movement of Dollar Index and fall in crude, also affected the same.

·        The Dow Industrial Average moved up only up by a nominal 0.5% in the entire week to close the week on 10318.16 points, with a small gain of 47.7 points. Nasdaq Composite Index reversed some of its earlier gains by paring off 21.84 points or 1% from its opening during the week, with six of the 10 components ending in losses. Even there was an almost comparable shed of 0.2% in S&P 500 index during the entire week.

·        The earlier gains in stocks posting good results was short lived, and restricted to some of the retail stocks like Walt Disney, and some of those retailers declaring results very late, missed the guidance.

·        Gold continued to soar strongly, and breached all time level of $1158,  and ended up  at around 1147 per troy ounce  on Friday. During the weekend, the prices soared further to $1163.

·        The Dollar Index remained volatile throughout the week, and recovered only on Thursday and Friday.

·        BOA-Merril Lynch downgraded semiconductor stocks.

The Weekly Commentary

The 0.5% gains for the week recorded in the week by DJIA were led largely by some better earnings for the quarter posted towards the fag end of quarterly results, which were announced in the last week like GAPS and Target.

During the weekend, Nestle announced that it could be considering making acquisition offer for Kraft Foods Inc. and the latter also said, that it could also get interested in a M&A activity, by some other peer.

The downgrade of semiconductor sector by BOA-Merill-Lynch group during the week, led to a sell-off in a number of heavyweights listed in NASDAQ technology stocks. The same led to some retracement in NASDAQ composite index.

Even the DELL Inc. missed out on the guidance on Thursday evening, and while the stock remained in stock in ahead of earnings, it later witnessed a lot of selling pressure on Friday. 

The retailers have started coming in focus ahead of Black Friday buying this week, when a robust sales could be expected now, after thanks-giving day.

This is a shortened week for trading in US market, as US holiday is due on Thursday and a half day on black Friday.

Crude oil prices continued to remain slightly weaker during the week and closed at $77 per barrel, as gas prices remained weak.

The Week Ahead

Monday: Existing Home Sales

Tuesday: GDP monthly estimates for Q3 on Tuesday; Consumer confidence data; FHFA Housing Price Index

Wednesday: Jobless claims data; Consumer Sentiment Data; New Home Sales

Thursday: US holiday

Friday: Fed Balance Sheet; Retail sales for the day will  also mean a lot in subsequent week.