Late-year rejiggering is generally what’s afoot; hence the S&P is very quiet, which is actually pretty constructive as far as nominal consolidation after what was a barn-burner of a rebound coming off our washout lows of late October.A few variables could hinder the market holding together; but so far so good. I am not bothered by interest rate, Oil or Dollar behavior for just now. That’s liable to change; but barring drastic over-weekend news, not for the moment.
Whether the Israeli/Gaza war ‘so far’ is drawing toward victorious conclusion as far as near-term victory by Israel (and by inference surviving Palestinians if they can govern reasonably after Hamas is eviscerated) is key in one way.That way is: it must not be prologue to what comes next. So far both Israel as well as United States (and France by extension in Lebanon) have absorbed a number of relatively minor series of (not trivial if you were in the area) attacks by Iranian proxies; or by Iran itself which is being somewhat squashed by the media. We mentioned the latest Houthi/Yemen drone attack on a US warship a couple days ago; and you hear almost nothing. So yes, retaliation could be in the wings; or not, and that’s why there’s a bit of trepidation.Market X-ray – very satisfied with S&P consolidation after the big lunge higher earlier in the week. S&P 4400 resistance is now weekly support, while a zone around 4500 is trying to become hourly support for the moment.This is a military weekend, so we pay attention to that; and notably little else has changed, plus there’s no serious vitriol coming from Communist China yet. Also we got a low for Oil, and though it was a buy in the low 70’s; and likely it was (so far anyway). I suspect Saudis want Oil higher (if not sooner then via the upcoming OPEC meeting next month).The consumer has been resilient only in some ways; the market outside of the mega-caps was clobbered going into our projected S&P washout low; and I’m not going to call small-caps ‘resilient’ because they’re generally lateral more or less in the vicinity of recent lows. However later in the Season may do better.
I’m aware of a few pundits and Fed-heads that keep talking of inflation or yet a need for more firming by the Fed. Balderdash. The market won’t take that; at the same time hearing that keeps many bearish and that helps the upside just when there are thrusts that run-in short-sellers. What’s notable about the past week or two is that even ‘if’ you viewed our rally as a short-squeeze, the action thereafter has been an excellent consolidation (so far); as a favorable sign.We are absolutely open to this all part of an A-B-C rally off the trough October low; and a normal pullback would look similar to a decline or rally failure; so it is a matter of faith to remain optimistic through a forthcoming retreat if that is on the menu. And that may depend on the war progress (and non-expansion into a regional affair beyond what we’ve seen); as stocks otherwise should be holding together ahead of Thanksgiving. You have the pattern and seasonals.
The massive under-performance of small-caps is struggling to improve; but it still contends with seasonal tax pressures; so sideways is acceptable for now. It’s not so much for the S&P, which needs to hold together to be reassuring.At the same time we’ve allowed for a retracement, even a ‘B’ wave correction; but seasonals argue that could come a little later; barring a war expansion. In a sense the market reflects shuffling and not consumer retail stocks; although it is a contributor but not very important. What this is about is planning for ’24.
Bottom line: the face of ‘generative Ai’ lost his job and that ruffled feathers a bit late Friday; otherwise not much. Similarly the Applied Materials drop on failure to conform to U.S. restrictions on exports to China, didn’t impact others much (we’re not in AMAT, and haven’t been; maybe they’ll focus more domestically going forward). As to the Open Ai controversy; again we’re not directly in that. Microsoft got hit a bit as a result; and surely the regulatory pressure might play a role here. As to small-caps like SoundHound; that’s ‘conversational Ai’ so is different. So is BigBear.ai, which is ‘battle-space’ management (and commercial too).Thus the massive shakeup in OpenAi doesn’t impact the speculative group we follow; unless you wish to include the little shake it gave to Microsoft. In the general market it remains more of the same; and appropriate seasonally.More By This Author:Market Briefing For Thursday, Nov. 16th
Market Briefing For Wednesday, Nov. 15th
Market Briefing For Tuesday, Nov. 14th
