Hey everyone, I hope for those of you in US markets are having a wonderful Thanksgiving Celebration with family and friends. It is a time for eating, football and of course spending for those year end holiday gifts! Markets are coming into the last month of the year clearly in much better shape than last year.
Weekly Sound Bites:
• With a very big holiday week here in the US behind us we see markets continued to grind higher with the DOW, S&P and NASDAQ making new all-time highs (26th time for S&P and 21st time for NASDAQ) and the Russell playing catch up and having a solid week as it made new 52 week highs….this is also, from a seasonal perspective, to see the small cap stocks that make up the Russell 2000 lead the way higher as we moving into the end of the year…In fact, in the past 32 Decembers of the Russell’s existence, it has posted gains in the month of December averaging 2.59% over 81% of the time…Of course a big exception was last December 2018 when it fell over 12.05%, its worst ever…
• Now the holiday shopping season is now game on with Consumers racing out to fill their holiday gifts as the National Retail Federation forecasts over 4.3% YoY growth showing the strength of the US Consumer…and in addition to the seasonal influence on market price action we will also see a new batch of US Economic data like the Nov Employment Report and a look at US manufacturing data…we have also seen a very poor year in the US Energy Markets showing only a gain of about 5% for the year vs the mid-twenties percentage return of most US Indexes…for those looking for a reversion back to more reasonable valuations should see the Energy Sector possibly outperform next year…
• The Volatility Index or VIX tracks the degree of fear in the markets and at this time we are seeing levels in the VIX not seen in over a year but what is worrisome is the number of open short positions on Volatility Futures which are reaching levels last seen in January 2018…the problems this pose is that should any larger move lower in US Equities could be accelerated more so as those Short Volatility positions are shut down….so caution is urged here with this lower Volatility readings we’re seeing at this time…
• Obviously, this year has been very strong but for 2020 most analysts are projecting much slower growth with an average growth forecasts coming in about 3% which moves the S&P up to 3240 price levels…in addition we can also expect more bouts of Volatility compared to performance we are seeing this year…
Enjoy our Weekly Round-Up Video
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