Weekly Wisdom: Bulls Keep Momentum; Is The Grinch Coming?

Greetings fellow traders and welcome to your November 30th edition of Weekly Wisdom: Levels to Know and Moves to Look For!

Now let’s get to what we’re currently seeing in these volatile markets and what we have our focus on going forward.

Taking a look back on this week, November 27 – December 1

• Markets have stalled out into the end of the month after a ferocious rally throughout November. $SPX futures made their high for the month right at the end on 11/29 with a high of 4597, well above the month low of 4191.  
• Data for the week kicked off on Monday with a miss on new home sales coming in at 679,000 vs 724,000 expected.  
• On Tuesday, the Richmond Fed manufacturing index was a miss at -5 vs 1 expected. The Conference Board’s consumer confidence index was a beat at 102 vs 101 expected.  
• The first revision of Q3 GDP q/q was a beat Wednesday morning, coming in at 5.2% vs 5% expected. The GDP price index q/q was also a slight beat at 3.6% vs 3.5% expected. The goods trade balance was a miss at -$89.8 billion vs -$86.4 billion expected. Preliminary wholesale inventories m/m was a beat at -0.2% vs 0.1% expected.  
• Thursday brought us inline numbers for weekly unemployment claims at 218,000 vs 219,000 expected. The headline PCE price index was unchanged monthly vs 0.1% expected and 3% y/y as expected. The core PCE price index was inline with expectations at 0.2% monthly and 3.5% annually. This was all followed by a beat on the Chicago PMI 55.8 vs 46 expected. Pending home sales was also a beat, although still negative, at -1.5% vs -1.9% expected.  
• Friday, December 1 ends the week with Final manufacturing PMI at 9:45 a.m. ET, followed by ISM manufacturing PMI, ISM manufacturing prices, and construction spending m/m all at 10:00 a.m. ET. Fed Chair Powell is also set to speak at both 11:00 a.m. ET and 2:00 p.m. ET. 

Here’s what we are eyeing next week, December 4 – 8:

Level Highlights:

• $SPX futures are set to end an arguably historically strong month just off the highs, trading up to nearly 4600 for the month high after bottoming just over 4100 at the end of October, giving us a 400+ handle rally in just one month. 
• Two weeks ago we shared that bulls were fully in control but may have gotten a bit ahead of themselves with such a fast and far move higher. We have made new highs since then but have also stalled out and mostly chopped sideways the past week, with a failed bull flag breakout occurring Wednesday to mark the high for the month.
• Bulls remain in control, but all participants are a bit stuck in this bull flag with 4550 as support and 4575 as resistance.
• Should the bull flag failure have any follow through, bears should look for a 4550 breakdown to target 4525 and then 4500 as larger support. 
• Bulls are looking for another breakout attempt above 4575 with targets of 4600 and then 4625 which roughly matches the highs made back in July.  
• $VVIX began showing divergence last week, rising with the market since last Wednesday as the $VIX continued to stay heavy. 
• $VIX has now found support at 12.50. Bears are looking for a move to 14 and then 16. Bulls are looking for the $VIX to not trade back above 14 and ultimately bleed back lower to the low 12s.

Upcoming News:

• Monday, December 4 starts the week off with factory orders m/m at 10:00 a.m. ET.  
• Tuesday, December 5 is a big data day with final services PMI at 9:45 a.m. ET followed by ISM services PMI and JOLTS job openings at 10:00 a.m. ET.
• Wednesday, December 6 starts off with ADP non-farm employment change at 8:15 a.m. ET.  Later in the morning we’ll see revised non-farm productivity q/q, revised unit labor costs q/q, and the U.S. trade balance at 8:30 a.m. ET. There is a 10-yr bond auction just after 1:00 p.m. ET.  
• Thursday, December 7 starts with weekly unemployment claims at 8:30 a.m. ET, followed by final wholesale inventories m/m. There is a 30-yr bond auction just after 1:00 p.m. ET. The day ends with consumer credit m/m at 3:00 p.m. ET. 
• Friday, December 8 ends the week with the November jobs report which includes average hourly earnings, non-farm employment change, and the unemployment rate at 8:30 a.m. ET. We’ll then get the University of Michigan consumer sentiment and inflation expectations index at 10:00 a.m. ET.

Here’s Your Chart of the Week:

Via Goldman Sachs: GS on Buybacks: “still +$5B of demand per day, but will decline from here into the blackout window on December 8th. 95% of the S&P is currently in the open window. 2023 is the 3rd best year for authorizations on record and November saw a big tick up in executions” Note the blackout window begins on December 8th and may hinder bullish flows the market is currently seeing.

Source: https://twitter.com/WallStJesus/status/1729372222056226974/photo/1

SPY Daily Update:

$SPY attempted to break out of the daily bull flag / 457 resistance but failed to hold and ultimately closed back under the resistance level. Bulls are looking for 453 – 451 support to keep holding while we continue to correct through time. Bears are looking for this failed move higher to be the start of a bigger price correction with a large gap going down to 441 support.

SPY Weekly Update:

$SPY weekly chart is finally seeing some selling come in after 4 very strong weeks. The upper tail on this weekly candle may signal a bigger correction to come in the month of December. 

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-Patrick Hawe

Disclosures

Patrick Hawe’s current positions:

*As of 2:58pm ET November 30, 2023

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