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Watch For The Reaction November 28, 2021

Posted by Tom in Thoughts.
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Nov. 26, 2020 –  The Thanksgiving week (in the US) was supposed to be quite and uneventful until new concerns about a new Covid variant came up in South Africa.  So “here we go again”.   Next week will give us a better idea just how serious the Omicron variant could potential be, especially for those who are already vaccinated.  But let’s keep things in perspective.

I start off with a chart weekly of the SPY (S&P 500 ETF) with a longer term +4 years perspective.  I’ve drawn channels that try and capture the “big picture” moves and breaks.   Well . .  we were at the top of the channel and venerable to a correction / drop.  In that case all it takes is bad news and we got it.

click to enlarge

I expect the markets to react poorly Monday morning, but the real “test” will come in the afternoon and the following days when raw emotion settles down and more facts emerge.  The big picture is that this market was venerable to any type of disappointment or bad news, and reacted as such.

The shorter term chart of the broad NASDAQ Composite is shown below.  I note that (in the short term) it has also reacted and is showing weakness, but keep in mind the very low volume late last week due to the holiday and short trading session.  Do we recover from the 15544 level or continue lower to 15198?  I’m thinking a push to 15198; maybe lower.  How this market reacts to this news will tell us just how strong it is underneath.

click on chart to enlarge

Tech sectors continue to lead and it will be interesting to hear about pre-Christmas sales from “Black Friday” shopping on Monday.  A poor sales figure in the US over the Thanksgiving holiday could prove to be a “double whammy” of bad news for this market.  This is a good time to watch and have a plan just in case folks start to abandon ship before the end of the year.

Have a good week and keep an eye open especially over the next 2-3 days.  How the market reacts will provide a good idea of just how strong it is underneath. ………… Tom …………..

Price chart by MetaStock; pie chart & table by http://www.HighGrowthStock.com. Used with permission.

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