LIVE MARKETS Bears poke their heads up

]

Summary Major U.S. indexes slide; banks, small caps take big hits

Energy weakest major S&P 500 sector; healthcare sole gainer

Euro STOXX 600 index falls >3.5%

Dollar down; gold up; crude, bitcoin collapse

U.S. 10-Year Treasury yield collapses to ~1.50%

Nov 26 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

BEARS POKE THEIR HEADS UP (1137 EST/1637 GMT)

The percentage of investors with a bearish short-term outlook for the U.S. stock market has risen to its highest level since early October in the latest American Association of Individual Investors Sentiment Survey (AAII). With this, both bullish and neutral sentiment declined.

With these changes, the bull-bear spread fell to -1.90 from +11.6 last week read more :

AAII11262021

(Terence Gabriel)

U.S. ON THE MAT (1056 EST/1556 GMT)

U.S. stocks are being tossed to the floor on Black Friday, triggered by the discovery of a new and possibly vaccine-resistant coronavirus variant.

Not surprisingly, given renewed coronavirus concerns, more economically sensitive groups and “re-opening plays” are being hit especially hard, while defensive groups see less severe declines.

Banks (.SPXBK) and small caps (.RUT) are down more than 4%. Energy (.SPNY) is sliding nearly 6%, while NYMEX crude futures are collapsing more than 11%.

The 10-Year U.S. Treasury yield has plunged to the 1.50% area.

Healthcare (.SPXHC) is a bright spot as the only major S&P 500 (.SPX) sector up on the day, though just fractionally.

This chart shows action in a composite of five major re-opening plays vs a composite of five major stay-at-home stocks :

AwayVStay11262021

As the re-opening group is hit relatively harder vs stay-at-home plays, the ratio is on track for its biggest daily percentage decline in more than a year.

Meanwhile, retail stocks are also down sharply on this Black Friday. The SPDR S&P Retail ETF (.XRT.P) is off more than 3%.

Here is where markets stand in mid-morning trading:

midmorning11262021

(Terence Gabriel)

U.S. STOCKS POISED TO PLUNGE (0900 EST/1400 GMT)

U.S. equity index futures are sliding on Friday, with travel, bank and commodity-linked stocks bearing the brunt of the selloff, as the discovery of a new and possibly vaccine-resistant coronavirus variant, spooked investors ahead of a short trading session.

Of note, over the past 10 years, the day after Thanksgiving has been relatively quiet. On average, the Dow Jones Industrial Average (.DJI) has opened down around 0.05% and ended the day with a 0.05% gain. Over this period, the DJI’s range on that Friday as a percentage of the prior trading day’s close has averaged only around 0.6%.

As stands, the CBOE Market Volatility Index (.VIX) has popped to a more than two-month high, and CBT e-mini Dow Futures are suggesting the Dow will plunge more than 2% in the early throes of this Black-Friday session. And at more than 3%, the Dow Futures' range so far today as a percentage of Wednesday’s close is its biggest since early January.

All of this is occurring in the wake of pronounced technical deterioration across the market. Click here: read more

Thus, based on the futures' action, the DJI’s 50-day moving average (DMA), which ended Wednesday around 35,260, can quickly come under pressure. The Dow has not closed below this intermediate-term moving average since October 13:

DJI11262021B

The DJI’s 200-DMA ended Wednesday around 34,300. The blue-chip average has not closed below this long-term moving average since July 13, 2020.

A key support line resides around 34,000. Click here: read more

Here is your premarket snapshot:

premarket11262021

(Terence Gabriel)

FOR FRIDAY’S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT - CLICK HERE: read more

Terence Gabriel is a Reuters market analyst. The views expressed are his own

Our Standards: The Thomson Reuters Trust Principles.

LIVE MARKETS Europe: worst session since June 2020

]

Summary Major U.S. indexes slide; banks, small caps take big hits

All major S&P 500 sectors red: energy down most

Euro STOXX 600 index ends down 3.7%

Dollar down; gold up; crude, bitcoin collapse

U.S. 10-Year Treasury yield ~1.50%

Nov 26 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

EUROPE: WORST SESSION SINCE JUNE 2020 (1153 EST/1653 GMT)

European stocks got their worst beating since June 2020 with a 3.7% fall and the extent of the market turmoil had many similarities with the March 2020 COVID-19 crash.

Travel and leisure stocks plunged a whopping 8.7%, a performance unmatched since March 2020 with airlines stocks being dumped in a dramatic fashion.

BA owner IAG fell about 15% after Britain banned flights from South Africa and Ryanair lost 12%. Cruise operator Carnival was the top loser with a 16% drop.

Many other countries are already putting in place travel restrictions amid fears the new variant might be to some degree vaccine resistant.

With a new wave of social restrictions already being implemented across Europe, investors are taking no chances.

The travel and leisure index is now down 6.6% since the beginning of the year and has lost nearly 20% this month alone.

It’s obviously not a good time to be building planes and Airbus has fallen 11%.

Banks, which have become a barometer of the pandemic crisis also had an excruciating day, losing 6.7%, their worst session since June 2020.

But the pain was well spread and cyclical stocks across other sectors such as car makers, miners, energy, insurance, retail, construction and industrials fell between 4% and 6%.

There were little safe places to hide and even pharma, the best performing sector today, lost 1.2%.

travel

(Julien Ponthus)

BEARS POKE THEIR HEADS UP (1137 EST/1637 GMT)

With these changes, the bull-bear spread fell to -1.90 from +11.6 last week read more :

AAII11262021

(Terence Gabriel)

U.S. ON THE MAT (1056 EST/1556 GMT)

U.S. stocks are being tossed to the floor on Black Friday, triggered by the discovery of a new and possibly vaccine-resistant coronavirus variant.

Not surprisingly, given renewed coronavirus concerns, more economically sensitive groups and “re-opening plays” are being hit especially hard, while defensive groups see less severe declines.

Banks (.SPXBK) and small caps (.RUT) are down more than 4%. Energy (.SPNY) is sliding nearly 6%, while NYMEX crude futures are collapsing more than 11%.

The 10-Year U.S. Treasury yield has plunged to the 1.50% area.

Healthcare (.SPXHC) is a bright spot as the only major S&P 500 (.SPX) sector up on the day, though just fractionally.

This chart shows action in a composite of five major re-opening plays vs a composite of five major stay-at-home stocks :

AwayVStay11262021

As the re-opening group is hit relatively harder vs stay-at-home plays, the ratio is on track for its biggest daily percentage decline in more than a year.

Meanwhile, retail stocks are also down sharply on this Black Friday. The SPDR S&P Retail ETF (.XRT.P) is off more than 3%.

Here is where markets stand in mid-morning trading:

midmorning11262021

(Terence Gabriel)

U.S. STOCKS POISED TO PLUNGE (0900 EST/1400 GMT)

All of this is occurring in the wake of pronounced technical deterioration across the market. Click here: read more

DJI11262021B

The DJI’s 200-DMA ended Wednesday around 34,300. The blue-chip average has not closed below this long-term moving average since July 13, 2020.

A key support line resides around 34,000. Click here: read more

Here is your premarket snapshot:

premarket11262021

(Terence Gabriel)

FOR FRIDAY’S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT - CLICK HERE: read more

Terence Gabriel is a Reuters market analyst. The views expressed are his own

Our Standards: The Thomson Reuters Trust Principles.

Week Ahead on Wall Street (SPY QQQ): Omicron variant puts breaks on stockmarket festivities

]

Equity markets plummet on a new covid variant from South Africa.

Likely to be named Omicron, this variant appears to be vaccine-resistant.

Equity markets collapse as travel leisure and airlines hit hard while vaccine makers surge.

The equity markets took a serious turn for the worse on Friday in a thanksgiving hangover show. This probably has been brewing for some time and we did note the spike in VIX earlier in the week which is often a portent of doom. While the sell-off has been put down to the new strain of covid found in South Africa, some selling was long overdue in a Fed juiced market that showed no sign of slowing. Now this new strain of covid looks to be worrying according to initial research. More transmissible, more vaccine-resistant and more variants mean it could become the dominant strain globally, just as delta took over from earlier versions. However, even if it is resistant to vaccines, we have to have confidence in the ability of vaccine manufacturers to quickly bring out variants of the vaccine to combat any new strain and added to this we now have two antiviral pills from Merck (MRK) and Pfizer to help in the fight. So for now we will wait for further information before heading into wide-scale doom and gloom mode.

Europe is however in the grip of a fourth wave regardless of any new variants as the delta variant’s spread sees Germany, Austria and many Eastern European countries impose some form of lockdowns. This was causing some concern for investors already before this new strain arrived on our worry screens. With equity valuations already highly stretched and a lack of liquidity around Thanksgiving, the moves are being exacerbated on Friday. We had in our earlier weekly notes this November already restated our view for a 5-10% correction before the Santa Claus rally kicked in, so this is playing out nicely if a bit more volatile than anticipated.

S&P 500 (SPX) (SPY) 15-minute chart

Market Breadth

We mentioned VIX spiking in our daily report on Wednesday and last week we focused on the markets diminishing market breadth under the byline “you breath stinks”. For those not familiar, market breadth refers to the wide scale health of the stock market. If the SP500 rallies but only 10 stocks are making new highs or up on the day that means it is not a broad-based rally or it can be said to have poor market breadth. Traditional indicators are stocks trading above their 200-day moving average, stocks making new yearly highs or lows, and the number of advancers or decliners on a given day.

The number of stocks making new 52 week highs, above, is still falling. A bit concerning but other indicators are far more worrying.

Last week we highlighted the number of stocks making new lows was actually increasing despite the main indices rallying. Counterintuitive as it sounds. This trend has worsened and is now exceptionally high, the trend is actually accelerating. This rally was way too narrow and is now likely to pay the price.

Number of stock making new 52 week lows

The number of stocks above their long-term 200-day moving average (below) was also beginning to decline. Well as we can see the trend has persisted.

When you add this in with rising bond market volatility (MOVE) and rising VIX you have quite the recipe for fear, fear is the path to the Darkside as someone once said and is the path to suffering. Well, longs are suffering right now and we see this continuing into next week. We already have the macro background in place, rising inflation, rising yields, and rates and a rising dollar and now real fear.

MOVE Index, Bond market volatility above, and VIX chart below. Fear is now in charge of this market going forward.

Investor sentiment surveys

The latest sentiment surveys we have do not take Fridays move into account and will likely worsen. But already the American Association of Individual Investors (AAII) has turned bearish with the lowest bullish reading we have seen for some time.

Source: AAII.com

The professionals have ignored the fear for now. The National Association of American Investment Managers (NAAIM) data shows investment managers are over 100% long the market still, but again as noted this data is also until last Wednesday. Expect a panic reduced number for next week.

Source: NAAIM.com

S&P500 (SPY) forecast

Our weekly note from last Friday “We are going to go out on a limb here and call for the S&P (SPY) to top out and retrace next week to $453. The factors above re market breadth are weighing on our mind as is the mess that Europe is in economically and covid related”. Currently at the time of writing the SPY is at $456 so only 3 points to go with one hour left!

The market breadth indicators still favour more downside as does the now elevated VIX and other fear indicators. $453 won’t hold and is not the buy the dip point in our view. That is more likely around $440 to $444. The bearish divergence in the RSI identified last week has now played out so watch for divergence on the downside.

Earnings week ahead

We still have a few retailers left to report and if recent evidence is anything to go by these will be mixed at best. Some meme stock favourites are still around such as Crowdstrike (CRWD) and Snowflake (SNOW).

Source: Benzinga Pro

Economic releases

The week revolves, as ever for the first week of the month, around the employment report. Jobless claims have been hitting multi year lows so it should flow thorough to a positive report. Powell takes to the wires this week and his comments have more significance than usual now with the markets in full fear mode. Can he soothe them again?

follow us