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“Indecision may or may not be my problem.” – Jimmy Buffett
After a strong start to the week, investors are taking a step back from buying this morning as futures are firmly negative and have been gradually weakening all morning. Following big losses right after Thanksgiving and then a sharp rebound over the last week, investors can’t seem to make up their minds.
The biggest news item of the day so far has been initial jobless claims which fell to an unheard of 184K which was well below the already low estimate of about 225K. As equities pull back, treasuries have been rallying with the 10-year yield back below 1.5%. The big economic data in the US will come tomorrow with the release of November CPI, but overnight in China, CPI came in weaker than expected on a y/y basis (2.3% vs 2.5% forecast).
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
What a difference a week makes. Looking at how sector performance has changed over the last week provides a perfect illustration of indecisiveness in the equity market. The first snapshot below is from our Trend Analyzer from a week ago today (through the close on 12/1). At the time, every major index ETF was down at least 2.5% over the prior five trading days with the majority below their 50-day moving averages after trading at or near overbought levels just a week earlier. Mega-cap indices like the Nasdaq 100 (QQQ) and S&P 100 (OEF) were holding up best at the time while small and mid-cap stock indices were down over 7% in the span of just five trading days.
Fast-forwarding just a week, the picture has completely changed. Now, every major index ETF in the Trend Analyzer is up at least 3% over the last five trading days, and the majority are back above their 50-day moving averages. Leading the way higher, the same indices that were down the most have bounced back the greatest while mega-cap indices like the Nasdaq 100 (QQQ) and S&P 100 (OEF) are the only two that are up less than 4% over the last five trading days.
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