Weekly Recap
Last week’s market action showcased resilience, with the S&P 500 (SPX) closing at 5,962, up ~1.5%. Dip-buying trends persisted despite mixed earnings and macro signals.
Key drivers:
Sector Rotation: Financials, energy, and industrials led gains, while semiconductors underperformed, reflecting Nvidia’s (NVDA) post-earnings weakness.
Economic Data: Strong services PMI and jobless claims reinforced the "soft landing" narrative.
Technical Factors: SPX held its 20-day SMA, reversing higher and setting up for a potential push to 6,000.
The Russell 2000 (RUT) mirrored this trend, bouncing off its 20-day SMA, gearing up to retest its three-year closing high at 2,434.
Market Sentiment & Focus
Sentiment: Thanksgiving week historically favors bullish outcomes due to lighter volumes amplifying moves. Risks include rising bond yields (watch 4.50%) and Wednesday’s PCE inflation report, which may challenge the "friendly Fed" narrative.
Market Focus:
Earnings Spotlight: Notable reports include CrowdStrike (CRWD), Dell (DELL), and Autodesk (ADSK).
Economic Data: PCE Prices, Durable Goods, and GDP revisions on Wednesday are critical for Fed expectations.
Key Levels to Watch (ES Futures)
Putin or Grind: ES futures show a steady climb, with key resistance at 6,050/70 and support at 5,950/20.
Market Breadth: Broad participation across indices supports the rally, led by mid- and small-cap stocks, while Nasdaq remains a laggard, reflecting selective leadership.
Watchlist Names: Keep an eye on underperforming sectors and lagging names to pick up if the rally continues to broaden.
Trade Ideas for the Week
1. Earnings Momentum Plays
CrowdStrike (CRWD): Earnings call focus on ARR growth and profitability.
Dell Technologies (DELL): Watch for insights on enterprise spending and AI-related tailwinds.
Analog Devices (ADI): The market expects headwinds from inventory gluts; any surprises could create opportunities.
2. Sector-Specific Opportunities
Financials: Continue to lead, with strong picks like JPMorgan Chase (JPM) and Wells Fargo (WFC).
Energy: Rising oil prices and seasonal demand favor Exxon Mobil (XOM) and Chevron (CVX). CVX looks interesting from exposure and trend break point of view
Consumer Discretionary: Retail earnings from Best Buy (BBY) and Dick's Sporting Goods (DKS) will offer insights into holiday spending trends.
3. Defensive & Dividend Stocks
Procter & Gamble (PG) and Coca-Cola (KO) provide stability in case of unexpected volatility. Dividend hikes from HP Inc. (HPQ) and Campbell Soup (CPB) add to the attractiveness of staples.
Earnings & Economic Data to Watch
Economic Reports
Tuesday (11/26): Consumer Confidence, FHFA Housing Price Index, New Home Sales
Wednesday (11/27): PCE Prices, GDP Revisions, Durable Goods
Earnings Highlights
Monday (11/25): Zoom (ZM), Agilent (A)
Tuesday (11/26): Dell (DELL), CrowdStrike (CRWD), Workday (WDAY)
Summary
Seasonal Rally: Thanksgiving to year-end is historically strong for U.S. equities, with 2024 reflecting post-election years like 2016, favoring rotation and reflation into January.
Massive Inflows: U.S. equities saw $105 billion in post-election inflows, driven by passive funds, while active funds face outflows.
Rotation Trends: A shift from "Magnificent 7" tech stocks to financials, industrials, energy, and transports; small-cap and equal-weight indices hit new highs.
Volatility & Straddles: Volatility is near seasonal lows; opportunities in short-dated (1-DTE) trades and mean reversion setups.
Buybacks & Liquidity: Corporate buybacks ($960B YTD) and lighter holiday trading volumes may amplify moves into year-end.
some names to watch for tells and rotations..
Market Themes and Stock Baskets
1. High-Growth Tech and Innovation
These stocks represent significant growth opportunities driven by technological advancements and innovation. They are volatile but offer substantial upside.
Netflix (NFLX): Strong recent performance; benefiting from content-driven subscription growth.
Intuitive Surgical (ISRG): Leader in robotic-assisted surgery with impressive six-month gains.
Applovin (APP): Exceptional growth with a 316% six-month return, indicating strong momentum.
Autodesk (ADSK): A key player in design software, benefiting from increased digital transformation.
Rocket Lab (RKLB): Leading in aerospace innovation with 435.9% six-month return. (we highlighted in Oct 14-18 note. now up over 100%)
Nextnav (NN): High momentum in geolocation technology with a 142.9% six-month gain.
2. Energy and Infrastructure
Stable returns from energy infrastructure and essential services, driven by increasing energy demand and infrastructure spending.
Williams Companies (WMB): Solid energy infrastructure stock with strong long-term performance.
Cheniere Energy (LNG): A leader in LNG exports, benefiting from global energy demand.
Energy Transfer (ET): Reliable midstream player with consistent returns.
Air Products & Chemicals (APD): Benefiting from the shift toward hydrogen and cleaner energy solutions.
3. Defensive and Dividend Stocks
These stocks offer stability, consistent income, and are less affected by market volatility.
Altria Group (MO): A defensive play with a focus on income generation.
Procter & Gamble (PG): Reliable performer with a strong dividend history.
Enterprise Products Partners (EPD): Attractive yield and long-term stability.
Kimco Realty (KIM): Real estate exposure with consistent performance.
Old Republic International (ORI): Insurance sector stability with strong six-month gains.
4. Financial Strength
Financial institutions showing resilience, benefiting from economic expansion and interest rate dynamics.
Blackstone (BX): A leader in private equity with 58.5% six-month gains.
Bank of Nova Scotia (BNS): International exposure with solid returns.
Jefferies Financial Group (JEF): Strong growth supported by robust earnings.
Interactive Brokers (IBKR): Key beneficiary of rising interest rates and trading activity.
5. Consumer Discretionary and Lifestyle
Stocks driven by consumer spending and lifestyle shifts.
Royal Caribbean (RCL): Benefiting from a travel resurgence, with 64.1% six-month gains.
Toast (TOST): High-growth SaaS solution for the foodservice industry.
Deckers Outdoor (DECK): Strong consumer brand in outdoor and performance footwear.
Live Nation (LYV): Gains driven by a return to live entertainment and events.
6. Crypto and Bitcoin Exposure
Capturing upside from the ongoing rally in Bitcoin and blockchain-related assets.
iShares Bitcoin Trust (IBIT): Offers direct exposure to Bitcoin performance.
Grayscale Bitcoin Trust (GBTC): High correlation to Bitcoin price moves.
Robinhood (HOOD): Capitalizing on crypto trading activity.
Bitwise Bitcoin ETF (BITO): Leveraged exposure to Bitcoin with significant gains.
7. Industrial and Logistics
Companies focused on industrial growth and the logistics revolution.
International Paper (IP): Benefiting from sustainable packaging demand.
MPLX (MPLX): Logistics infrastructure for energy products.
RB Global (RBA): Gains from asset-heavy industries and equipment sales.
8. Speculative and Momentum Plays
High-risk, high-reward opportunities often linked to emerging trends or market cycles.
Carvana (CVNA): A turnaround story with 124.1% six-month gains.
SoFi Technologies (SOFI): Rapid growth in digital banking and lending services.
Rubrik (RBRK): Data security growth driven by increasing cyber threats.
Applied Optoelectronics (AAOI): Surging on technological innovation, with 320.7% six-month return.
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