Macro Market · Market Commentary · Newsletter · On Our Radar

Daily Commentary – Monthly Charts at Critical Juncture

US markets had a slight holiday hangover though damage was limited, with SPX down 11pts but held above the milestone mark of 2200 while the Dow dropped by only 54pts and remains firmly above 19000 and breakout area from ascending wedge.

20161129-DJIADaily.png

More noticeable weakness in the top momentum plays since Trump’s victory, including Russell 2000 (IWM) and Financials (XLF) were both down more than 1% while the regional bank ETF (KRE) dropped close to 2%. The Biotechs (IBB) which benefited on the heels of Clinton defeat also suffered a 1.5% drop. Though it goes without saying, it was a rather tiny profit-taking as all of the above remain healthily up between 9-17% on the month.

On that note, it is more important to start reviewing the longer-term monthly charts and assess from a technical perspective the implication of this monstrous rally and the outlook going forward. Today we will start with the major indices as well as the US Dollar. Tomorrow we will review the sector ETFs, commodities and interest rates. Although the current month is still in play, given the extent of the MTD move, we do not expect the larger picture to change much until the end of November unless there is a major surprise.

20161129-DJIA.png

Starting with the Dow, which has evidently been the outperformer among large-cap indices. Furthermore, the monthly technicals are also the strongest with an imminent breakout above a 13-year up channel line absent a significant drop in the end of the month. Hence, we ought to pay close attention to the Dow the coming 2 days whether it can confirm this breakout by staying above 19000. If so, we expect the strength to be carried over to the SPX, which has yet to reach its own very-long-term up channel about 2250 area but could make a charge up towards that level on a confirmed breakout in the Dow.

20161129-ES.png

The Nasdaq, similar to the S&P 500, is also lagging and has yet to reach the top of the up channel line connecting the marginal new highs since 2014. Upside is likely limited until 5000 is cleared on a monthly basis.

20161129-NQ.png

The Russell 2000 launched all the way to the confluence of 2 critical resistance lines: 1) top of megaphone pattern formed since 2014 and 2) 15 year up channel line which was last tested in 2015 and marked the top. Bulls would certainly want to be aware of chasing the momentum here.

20161129-RUT.png

Moving on to the US Dollar (DXY), which also faces a significant monthly close as it is currently sitting right on the pivotal line which defined 13-year consolidation since 2003. In addition, it is also at the top of a multi-year megaphone pattern. Whether the US Dollar can close above both major resistance lines will certainly shape the direction next month and into 2017.

20161129-DXY.png

All in all, the major US indices and US Dollar are at a critical juncture, and the monthly closes could be very telling on the next directional move. In particular, given the correlated nature of US Dollar with other asset classes and rest of the world, a confirmed monthly breakout in DXY will have major implications on other currencies, commodities, emerging markets, etc. We will certainly pay close attention to the end of month action and report any significant new developments should there is any. In the next edition, we will review other asset classes’ monthly charts.

 

 

 

 

 

Daily Market Snapshot

Sector ETFs by Daily Return %

SYMBOL NAME CLOSE DAILY (%) WTD % MTD %
XLU SPDR Select Sector Fund – Utilities 48.07  

0.91

1.91%

1.93% -2.75%
IYR iShares Dow Jones U.S. Real Estate Index Fund 75.18  

0.26

0.35%

0.35% -1.91%
XLP SPDR Select Sector Fund – Consumer Staples 51.33  

0.11

0.21%

0.21% -2.78%
XLK SPDR Select Sector Fund – Technology 48.04  

0.04

0.08%

0.08% 1.31%
PFF iShares S&P US Preferred Stock Fund 37.61  

-0.06

-0.16%

-0.16% -3.44%
QQQ PowerShares QQQ Trust 118.53  

-0.27

-0.23%

-0.23% 1.32%
SMH HOLDRS Merrill Lynch Semiconductor 71.53  

-0.18

-0.25%

-0.25% 4.78%
DIA Dow Jones Industrial Average ETF 190.78  

-0.52

-0.27%

-0.27% 5.30%
XLG Rydex Russell Top 50 ETF 154.16  

-0.54

-0.35%

-0.35% 2.75%
XLB Materials Select Sector SPDR 49.36  

-0.2

-0.40%

-0.40% 5.58%
SPY SPDR S&P 500 220.48  

-1.04

-0.47%

-0.47% 3.73%
XLI SPDR Select Sector Fund – Industrial 62.28  

-0.43

-0.69%

-0.69% 8.86%
XLV SPDR Select Sector Fund – Health Care 68.96  

-0.52

-0.75%

-0.75% 2.38%
XLY SPDR Select Sector Fund – Consumer Discretionary 82.32  

-0.66

-0.80%

-0.80% 5.40%
XLF SPDR Select Sector Fund – Financial 22.15  

-0.26

-1.17%

-1.16% 12.21%
XRT SPDR S&P Retail ETF 46.07  

-0.57

-1.23%

-1.22% 9.09%
IWM iShares Russell 2000 132.33  

-1.74

-1.31%

-1.30% 11.67%
XLE SPDR Select Sector Fund – Energy Select Sector 71.71  

-1.01

-1.40%

-1.39% 4.50%
IBB iShares Nasdaq Biotechnology 279.99  

-4.47

-1.58%

-1.57% 9.08%
KRE SPDR KBW Regional Banking ETF 51.31  

-0.99

-1.91%

-1.89% 17.17%
           

Commodity & Bond ETFs

SYMBOL NAME CLOSE DAILY  (%) WTD % MTD %
GDX Market Vectors TR Gold Miners 21.4  

0.79

3.76%

3.83% -12.72%
USO United States Oil Fund 10.44  

0.11

1.06%

1.06% -0.85%
GLD SPDR Gold Trust 113.8  

1.19

1.05%

1.06% -6.68%
SLV iShares Silver Trust 15.77  

0.14

0.89%

0.90% -7.07%
TLT iShares Barclays 20 Year Treasury Bond Fund 121.71  

0.89

0.73%

0.74% -7.27%
LQD iBoxx $ Investment Grade Corporate Bond Fund 117.12  

0.53

0.45%

0.45% -3.19%
AGG iShares Barclays Aggregate Bond Fund 108.55  

0.38

0.35%

0.35% -2.47%
HYG iShares iBoxx $ HY Corp Bond Fund 85.72  

-0.01

-0.01%

-0.01% -0.35%
DBA PowerShares DB Agriculture Fund 20.25  

-0.44

-2.09%

-0.25% -1.32%

Country ETFs

SYMBOL NAME CLOSE DAILY (%) WTD % MTD %
EWZ iShares MSCI Brazil Index Fund 33.91  

0.85

2.54%

2.57% -10.20%
EWJ iShares MSCI Japan Index Fund 49.92  

0.43

0.87%

0.87% 295.25%
EWS iShares MSCI Singapore Index Fund 21  

0.13

0.62%

0.62% 102.90%
EEM iShares MSCI Emerging Index Fund 35.39  

0.14

0.40%

0.40% -4.71%
FXI iShares FTSE/Xinhua China 25 Index Fund 37.23  

0.14

0.38%

0.38% 1%
EWT iShares MSCI Taiwan Index Fund 30.77  

0.07

0.23%

0.23% 95.24%
EWX SPDR S&P Emerging Markets Small Cap ETF 40.92  

0.05

0.12%

0.12% -4.84%
EWC iShares MSCI Canada Index Fund 25.9  

0.02

0.08%

0.08% 2.17%
EWY iShares MSCI South Korea Index Fund 53.03  

0

0%

0% -4.19%
DXJ WisdomTree Japan Total Dividend Fund 48.15  

0

0%

0% 6.64%
EWW iShares MSCI Mexico Index Fund 44  

-0.08

-0.18%

-0.18% -13.44%
EWM iShares MSCI Malaysia Index Fund 29.34  

-0.1

-0.34%

-0.34% 267.67%
EWA iShares MSCI Australia Index Fund 20.75  

-0.08

-0.38%

-0.38% 2.32%
EWH iShares MSCI Hong Kong Index Fund 20.9  

-0.09

-0.43%

-0.43% -3.11%
EWK iShares MSCI Belgium Index Fund 17.1  

-0.12

-0.70%

-0.70% -4.47%
EWD iShares MSCI Sweden Index Fund 27.41  

-0.25

-0.91%

-0.90% -0.47%
EWL iShares MSCI Switzerland Index Fund 28.24  

-0.26

-0.92%

-0.91% -2.65%
EWP iShares MSCI Spain Index Fund 24.95  

-0.23

-0.92%

-0.91% -9.11%
EWQ iShares MSCI France Index Fund 23.14  

-0.23

-0.99%

-0.98% -3.78%
EWG iShares MSCI Germany Index Fund 24.71  

-0.26

-1.05%

-1.04% -4.63%
EWN iShares MSCI Netherlands Index Fund 23.43  

-0.27

-1.15%

-1.14% -4.29%
EWO iShares MSCI Austria Index Fund 15.89  

-0.19

-1.18%

-1.18% -3.34%
EWU iShares MSCI United Kingdom Index Fund 29.91  

-0.38

-1.26%

-1.25% 99.40%
EWI iShares MSCI Italy Index Fund 20.85  

-0.44

-2.09%

-2.07% 84.84%

 

 

Week Ahead – Events and Economic Data

11/29 Tuesday

Time Event / Data
08:30 US GDP
09:15 FOMC Member Dudley Speaks
10:00 Consumer Confidence

 

11/30 Wednesday

Time Event / Data
TBD OPEC Meeting
09:45 Chicago PMI
10:00 Pending Home Sales
10:30 Crude Oil Inventories
14:00 Beige Book

 

12/1 Thursday

Time Event / Data
08:30 Initial Jobless Claims
10:00 ISM Manufacturing

 

12/2 Friday

Time Event / Data
08:30 NFP & Unemployment Rate
10:00 ISM Manufacturing

 

 

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