We hope everyone had a nice Thanksgiving. November closed out with selling after disappointing economic news hit newswires this morning. Most notably, the Chicago PMI fell to 48.7 (contraction) with expectations of the index at 54.0. Volume was up across the board as end-of-the-month volume poured in leaving a distribution day across all indexes. Energy and Telecom were today’s biggest winners as Health Care stocks took a beating. S&P Biotech stocks were down 2.35% as a group with BXLT and REGN down 3% each. Chinese stocks appear to have come alive as of late led by BIDU, CTRP, and BABA. Not the ideal way to come off the Thanksgiving week or ideal to end the month of November. However, we still remain in an uptrend and continue to see positives from this market.
There will be a lot of noise generated by the market this month. The Jobs report, ECB, and the Fed will all generate some sort of noise for this market to digest. This Friday we get another read on the number of jobs created by this economy. If the Chicago PMI is any indication this jobs report should not be a banner number. Current numbers pin the number at 200,000 jobs created in the month of November. It would be nice to have 500,000 jobs created, but given the economic data as of late we need a miracle. At the moment this market remains in position to capture all-time highs once again despite what the economy is doing.
Aside from Health Care the Retail sector had a difficult time today. We can only guess traders were not thrilled with how Black Friday turned out for retailers. Cyber Monday proved to be hard on TGT as their website crashed under the weight of all the traffic. How can on the busiest day of the year for retailers do they not have backup systems to handle the load? WMT and TGT continue their downtrends like many other retail stocks. We prefer stocks in uptrends with big upside potential. Sadly, retail does not appear the place to be at the moment.
We cannot wait to get December going here. The next two weeks will be filled with chatter on whether or not the Fed will decide to double the upper bound rate to 50bps from 25bps. While a 25bps rate increase is small the Fed is still planning on doubling interest rates. In the end, everything comes down to price and risk management. Execute a well-organized risk management process and you will succeed. Cut losses quickly and ride your winners.
