The astonishing month of November finally ended. Based on how much the world has changed during that span, it did felt a lot longer than a month. Indeed, 30 days ago, few imagined the possibility of a Trump presidency. 30 days later, most are now embracing the fresh, bright future for America, including the politicians who were not shy in condemning the President-elect before he was elected. For example, Mitt Romney’s “stunning 180”:
In some way, people are behaving just like the markets, with the Dow firmly in the breakout mode above the ascending wedge on the daily chart as well as LT up channel in the monthly chart. Seemingly the success of Trump’s grand plan which would “create 25 million jobs and push growth to 4 percent annually” is being priced in:
Whether it turns out to be fruitful remains to be seen, but we are in the “honeymoon period” during which hope trumps reality. Nonetheless, focusing on the technicals, yesterday we saw a shooting star doji, a bearish reversal candle pattern, for the first time since the beginning of the Trump Rally in the Dow. These type of candles especially in overbought conditions, have a high probability of a pullback in the coming days. While the LT technical picture is unambiguously bullish, in the ST, a pullback is expected in the Dow towards the wedge breakout area at 19000.
Likewise, the S&P 500 also has ST bearish technical development by breaking back under the ascending wedge, pointing to a downside target of 2175, the September swing high and a rising 20DMA:
Broader markets were not able to hold gains despite the OPEC production cut deal yesterday, which sent crude oil up 8% to just under 50 handle. To recap what transpired, “The 14-member group of major oil producers reached an agreement to reduce their collective output by 1.2 million barrels a day to a ceiling of 32.5 million barrels a day, al-Sada announced.”
http://www.marketwatch.com/story/heres-what-happened-at-opecs-oil-meeting-2016-11-30
While oil had an impressive rally, the big picture hardly changed for the commodity, as the daily chart remains bounded in a descending wedge between $43 and $51.
Meanwhile, it was indeed an early “Christmas gift for U.S. oil producers”, with the XLE launching 5% to further confirm a breakout in all timeframes, including the invalidation of the bearish H&S pattern on the monthly chart with an upside target of 80 from the current price point of 74.43:
On the other hand, the biotechs (IBB) are already suffering from the end of the honeymoon rally, as it continues to retrace and looks set to fill the gap left open since the Election. But we will likely find support from the bottom of descending channel and bounce towards the top again.
Switching gears, it has been a while since we look at the Treasury Bonds (TLT), which has been hovering near the lows since the post-Election waterfall drop. Technicals are increasingly suggesting the sell-off is getting exhausted, as positive technical divergence on marginally lower lows is pointing to a near-term bottom, similar to 2015 May-July bottoming period.
Across the pond, the country that continues to make negative headlines is Italy (EWI) and could be a catalyst for a partial reversal in the honeymoon rally in the US as well as onslaught in bonds and safe haven assets including Yen and Gold. On Dec 4, Italy will hold a referendum which could a renewed shockwave in Europe and across the globe:
Per Washington Post, the reasoning behind global consequences on a negative outcome is that “A panic in Italy could lead to a bank run, forcing the Italian central bank to impose capital controls as a stopgap measure. Italy’s political parties may plausibly react to this measure by clamoring for an exit from the euro zone.” In other words, a potential “Itexit” leading to contagion effects across Europe and the globe. While “Brexit” turned out to be an isolated event, a 2nd country following suit would be unthinkable.
Technically, the EWI has been marred near YTD lows though does have an inverse H&S pattern, which could turn out to be a bullish breakout if the referendum outcome surprises positively. But wouldn’t bet on it for now.
Daily Market Snapshot
Sector ETFs by Daily Return %
| SYMBOL | NAME | CLOSE | DAILY (%) | WTD % | MTD % | |
| XLE | SPDR Select Sector Fund – Energy Select Sector | 74.43 |
3.6 4.96% |
2.35% | 8.47% | |
| KRE | SPDR KBW Regional Banking ETF | 52.41 |
0.93 1.79% |
0.21% | 19.68% | |
| XLF | SPDR Select Sector Fund – Financial | 22.51 |
0.3 1.34% |
0.45% | 14.03% | |
| XLB | Materials Select Sector SPDR | 49.94 |
0.53 1.07% |
0.77% | 6.82% | |
| XLI | SPDR Select Sector Fund – Industrial | 62.41 |
0.08 0.13% |
-0.48% | 9.09% | |
| DIA | Dow Jones Industrial Average ETF | 191.4 |
0.21 0.11% |
0.05% | 5.65% | |
| SPY | SPDR S&P 500 | 220.38 |
-0.53 -0.24% |
-0.51% | 3.68% | |
| SMH | HOLDRS Merrill Lynch Semiconductor | 71.06 |
-0.2 -0.28% |
-0.91% | 4.09% | |
| XLG | Rydex Russell Top 50 ETF | 153.99 |
-0.51 -0.33% |
-0.46% | 2.63% | |
| PFF | iShares S&P US Preferred Stock Fund | 37.48 |
-0.18 -0.48% |
-0.50% | -3.77% | |
| IWM | iShares Russell 2000 | 131.61 |
-0.65 -0.49% |
-1.83% | 11.06% | |
| XRT | SPDR S&P Retail ETF | 45.71 |
-0.3 -0.65% |
-1.99% | 8.24% | |
| XLY | SPDR Select Sector Fund – Consumer Discretionary | 81.85 |
-0.69 -0.84% |
-1.36% | 4.80% | |
| XLV | SPDR Select Sector Fund – Health Care | 68.75 |
-0.66 -0.96% |
-1.05% | 2.06% | |
| XLK | SPDR Select Sector Fund – Technology | 47.5 |
-0.57 -1.19% |
-1.04% | 0.17% | |
| QQQ | PowerShares QQQ Trust | 117.51 |
-1.43 -1.21% |
-1.09% | 0.44% | |
| IYR | iShares Dow Jones U.S. Real Estate Index Fund | 74.85 |
-0.95 -1.26% |
-0.09% | -2.34% | |
| XLP | SPDR Select Sector Fund – Consumer Staples | 50.58 |
-0.82 -1.61% |
-1.25% | -4.20% | |
| IBB | iShares Nasdaq Biotechnology | 274.07 |
-6.33 -2.28% |
-3.65% | 6.77% | |
| XLU | SPDR Select Sector Fund – Utilities | 46.75 |
-1.52 -3.20% |
-0.87% | -5.42% | |
Commodity & Bond ETFs
| SYMBOL | NAME | CLOSE | DAILY (%) | WTD % | MTD % | |
| USO | United States Oil Fund | 10.93 |
0.87 8.29% |
5.81% | 3.80% | |
| HYG | iShares iBoxx $ HY Corp Bond Fund | 85.65 |
0.04 0.05% |
-0.09% | -0.43% | |
| DBA | PowerShares DB Agriculture Fund | 19.94 |
-0.06 -0.30% |
-1.77% | -2.83% | |
| LQD | iBoxx $ Investment Grade Corporate Bond Fund | 116.84 |
-0.44 -0.38% |
0.21% | -3.42% | |
| AGG | iShares Barclays Aggregate Bond Fund | 108.24 |
-0.43 -0.40% |
0.06% | -2.75% | |
| SLV | iShares Silver Trust | 15.66 |
-0.12 -0.76% |
0.19% | -7.72% | |
| GLD | SPDR Gold Trust | 111.75 |
-1.52 -1.35% |
-0.76% | -8.36% | |
| TLT | iShares Barclays 20 Year Treasury Bond Fund | 120.24 |
-1.98 -1.63% |
-0.48% | -8.39% | |
| GDX | Market Vectors TR Gold Miners | 20.83 |
-0.4 -1.90% |
1.07% | -15.05% | |
Country ETFs
| SYMBOL | NAME | CLOSE | DAILY (%) | WTD % | MTD % | |
| EWI | iShares MSCI Italy Index Fund | 21.75 |
0.37 1.72% |
2.16% | 92.82% | |
| DXJ | WisdomTree Japan Total Dividend Fund | 49.2 |
0.77 1.58% |
2.18% | 8.97% | |
| EWZ | iShares MSCI Brazil Index Fund | 33.49 |
0.29 0.87% |
1.30% | -11.31% | |
| EWH | iShares MSCI Hong Kong Index Fund | 21.17 |
0.15 0.71% |
0.86% | -1.85% | |
| EWC | iShares MSCI Canada Index Fund | 26.01 |
0.16 0.62% |
0.50% | 2.60% | |
| EWO | iShares MSCI Austria Index Fund | 16.09 |
0.07 0.41% |
0.03% | -2.16% | |
| FXI | iShares FTSE/Xinhua China 25 Index Fund | 37.59 |
0.13 0.35% |
1.35% | 1.98% | |
| EWS | iShares MSCI Singapore Index Fund | 21.05 |
0.07 0.33% |
0.86% | 103.38% | |
| EWX | SPDR S&P Emerging Markets Small Cap ETF | 41.17 |
0.07 0.17% |
0.73% | -4.26% | |
| EEM | iShares MSCI Emerging Index Fund | 35.5 |
0.06 0.17% |
0.71% | -4.42% | |
| EWW | iShares MSCI Mexico Index Fund | 44.12 |
0.07 0.16% |
0.09% | -13.20% | |
| EWD | iShares MSCI Sweden Index Fund | 27.49 |
0.04 0.15% |
-0.61% | -0.18% | |
| EWU | iShares MSCI United Kingdom Index Fund | 30.06 |
0.01 0.03% |
-0.76% | 100.40% | |
| EWP | iShares MSCI Spain Index Fund | 25.17 |
-0.01 -0.04% |
-0.04% | -8.31% | |
| EWJ | iShares MSCI Japan Index Fund | 49.89 |
-0.08 -0.16% |
0.81% | 295.01% | |
| EWQ | iShares MSCI France Index Fund | 23.45 |
-0.05 -0.21% |
0.34% | -2.49% | |
| EWL | iShares MSCI Switzerland Index Fund | 28.35 |
-0.07 -0.25% |
-0.53% | -2.28% | |
| EWN | iShares MSCI Netherlands Index Fund | 23.53 |
-0.06 -0.25% |
-0.72% | -3.88% | |
| EWY | iShares MSCI South Korea Index Fund | 53.26 |
-0.14 -0.26% |
0.43% | -3.78% | |
| EWM | iShares MSCI Malaysia Index Fund | 29.29 |
-0.08 -0.27% |
-0.51% | 267.04% | |
| EWK | iShares MSCI Belgium Index Fund | 17.13 |
-0.05 -0.29% |
-0.52% | -4.30% | |
| EWT | iShares MSCI Taiwan Index Fund | 30.74 |
-0.09 -0.29% |
0.13% | 95.05% | |
| EWG | iShares MSCI Germany Index Fund | 24.83 |
-0.09 -0.36% |
-0.56% | -4.17% | |
| EWA | iShares MSCI Australia Index Fund | 20.44 |
-0.34 -1.65% |
-1.87% | 0.79% | |
Week Ahead – Events and Economic Data
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 |
12/4 Sunday
| Time | Event / Data |
| TBD | Italy Referendum |
