The markets crashed on Black Friday, setting up good deals for Cyber Monday. Bricks and mortar just can’t get a leg up on digital deals.
The NASDAQ dumped more than 353 points on Friday thanks in part to President Biden’s South African travel ban due to the new COVID variant, OMICRON. Early word was the new mutation is more contagious than the DELTA variant and Wall Street reacted because of fresh lockdown concerns.
Fortunately, South African doctors treating early OMICRON patients say what they’ve seen so far is “very mild.” (1) News travels fast in the internet age, Wall Street had a weekend of leftover Turkey to digest and the latest regarding OMICRON. After hitting the leftovers, traders hit the buy button to start the new week.
We see a pivot in the NASDAQ’s chart. Pivots usually indicate a trend reversal is likely. In this case, the NASDAQ has zigged and zagged, ultimately heading lower. So, a downtrend. A pivot reversal from a downtrend can initiate a new uptrend. If that’s the correct call, then the NASDAQ might make its way back to its 52-week high of 16,212.23.
If the potential pivot is a fake out, then we know where support lies, Friday’s intraday low of 15,456.09. As long as the tech laden index stays above Friday’s low water mark, odds are the NASDAQ goes higher. It wouldn’t be good for stocks if the NASDAQ closed below 15,400.
Index investors might consider adding Invesco QQQ Trust (QQQ). If the pivot proves to be a reversal, QQQ shares should climb higher as well. Just remember to keep an eye on the NASDAQ’s level. A close below 15.4k would be our exit point.
Only two exchange traded funds (ETFs) that we monitor managed to end the last week in positive territory, Energy Select Sector SPDR Fund (XLE) and SPDR Series Trust – SPDR S&P Oil & Gas Exploration & Production ETF (XOP). We aren’t fans of either chart.
Utilities Select Sector SPDR Fund (XLU) is the only ETF in the top 10 performers that generates tepid interest. XLU has been consolidating between $66 and $68 since the middle of October. If the Utilities ETFs can get past $68, XLU should head higher. But, if it closes below $65.80ish, we’d cut losses and move on.
Much like our lukewarm feeling towards XLE, most of the fund’s holdings garner the same reaction. American Water Works Company, Inc. (AWK) is the only top 10 Utilities Select Sector SPDR Fund’s holdings that mildly gets our attention.
AWK traded below its 50-day moving average from the middle of September until last Monday. Getting to the plus side of the benchmark trendline is usually a bullish indicator, especially when it’s teamed with an uptrend, which is the case here.
If AWK can close to the better side of $177, then it has a shot at its 52-week high of $189.35. On the downside, a close below $165 would likely trigger more selling.
1 – https://www.reuters.com/world/africa/safrican-doctor-says-patients-with-omicron-variant-have-very-mild-symptoms-2021-11-28/