Thanksgiving week is seasonally one of the strongest of the year. On Monday, the tech-heavy Nasdaq and the broader S&P 500 followed the time-tested tradition of strong Thanksgiving weeks by notching a new intraday all-time high before pulling back later in the session.
In today’s tip, let’s take a look at what could be driving market direction into the end of the year. Then, we’ll wrap up with a quick thought on thankfulness, along with an exercise that I think you’ll find very enriching.
Since the October market swoon, I’ve been watching the “risk-on” behavior of market participants. The shallow nature of the market’s pullback was very telling—almost always a portent of better times to come. And the S&P still has not had a pullback bigger than 6% this year (on a closing basis).
So, the question (as always) is this: Can the market sustain this uptrend? We have the main force in the markets – Fed easy money still flowing in – that combines with some risk-on behavior, tilting the probabilities to continued short and even intermediate-term bullishness.
We see risk-on behavior in the strong growth that has happened in the tech sector since the summer swoon—a push up that takes tech stocks to their highest relative level in 21 years.
And on the “risk-off” side, the defensively oriented consumer staple stocks (think P&G, Coke, Walmart, etc.) are at 21-year lows relative to the broader market.
Strong retail sales leading up to the Christmas holiday season help add fuel to the fire. COST, BBY, and other strong retailers continue to rocket higher.
Of course, there are factors on the bearish side:
- Inflation, inflation, inflation. This will be the beast that eventually eats the bull, just not yet…
- Fed tapering. Although, the market showed at the initial announcement that it has already started discounting this action.
- Covid wave five. The Delta variant is just so contagious that winter weather is driving folks indoors and holiday get-togethers are sure to send numbers even higher.
For the Fed doves (easy money types) and those chasing returns, adding risk and experiencing Fear of Missing Out are still in charge for now.
An Exercise in Gratitude
One of the most powerful forces we can experience is a deep sense of gratitude. I find this idea reinforced in all spiritual traditions that I study and experience. This, of course, includes my Christian beliefs. I was blessed to be able to share a message at my church this past Sunday on the power of being thankful.
For me, gratitude is the wonderful feeling we get when we truly appreciate something. And the act of thanks-giving is one thing we can do to express that feeling of gratitude.
For your Thanksgiving activity (whether you’ll be celebrating or not), choose someone to express your gratitude. The first name or face that pops into your mind is most likely a great pick!
Do this today: Write them a note expressing why you are thankful for them. Be specific. The more details the better. Don’t worry about getting the thoughts down perfectly. A good note today is better than a perfect one tomorrow.
I’m doing this exact exercise along with you (actually, I’ve already started it). PLUS, I’m going to publish my letter of gratitude in an upcoming article.
I’d love to read your thoughts on gratitude as well! Send your notes to me at the email address below (you can take out any details that are too personal to share). I’ll read them all and share some of your thoughts with our readers in my next article. If you’d prefer your thoughts to not be shared or to be shared anonymously, please let me know and I’ll honor your wishes.
A very blessed and Happy Thanksgiving to you all!
As always, your thoughts and comments are always welcome. Please send them to drbarton “at” vantharp.com
Great trading and God bless you,
D. R.