Stock Market in Holiday Mood Ahead of Fed Minutes; Bitcoin could squeeze short sellers

Stock market indexes added to Tuesday’s gains ahead of Wednesday afternoon’s Fed minutes, as Americans went out to visit family and friends.


The Dow Jones Industrial Average gained 0.3% in robust trading Wednesday morning, while the S&P 500 gained 0.4%. The Nasdaq composite rose 0.7%, while the small-cap Russell 2000 index rose 0.2%.

Volume was up sharply on the Nasdaq and NYSE from Tuesday morning’s levels.

The yield on 10-year Treasury bills fell to 3.73%, crude oil resumed its downward trajectory, tumbling more than 3% to $77.71 a barrel. The January 2023 futures contract fell overnight to an 11-month low.

October durable goods orders rose 0.5%, beating analyst calls for almost no change. The rally highlights the continued resilience of the US economy, despite macroeconomic headwinds.

October new home sales rebounded, adding 632,000 to the consensus of 578,000. Last November consumer sentiment edged up to 56.8, higher than the consensus of 55.5 and preliminary reading of 54.7.

Bitcoin and crypto short squeeze?

Crypto assets look like battered fighters after the FTX fiasco, but short sellers may have pushed their bets too aggressively.

Bitcoin reassembled the $16,000 level Wednesday morning as Coin basis (COIN) is up about one point.

Bitcoin’s weekly chart indicates that relative strength readings have dropped to their lowest levels since January 2019.

The digital currency skyrocketed in the six months following that all-time low, tripling its price. The one-year return was even more phenomenal, taking Bitcoin nearly 1,000%.

The stock market awaits the Fed minutes

As MarketWatch reported this morning, David Donabedian, chief investment officer at CIBC Private Wealth US, doesn’t expect the release of the 2 p.m. ET Fed minutes to change the status quo.

“We will see the debate and discussions on the two-stage process, in other words, the importance of slowing the pace of rate hikes, but also not declaring victory over inflation,” Donabedian said.

Afternoon trading in the stock should be light despite the release, if history is any guide, as Americans will be heading out in large numbers to visit family and friends. US stock markets are closed on Thursdays and open for half-day sessions on Fridays.

But the half day does not guarantee low volatility.

In 2009, Dubai shocked world markets Wednesday afternoon before the holidays by warning it needed to reschedule debt for its flagship fund Dubai World.

American traders were forced to sit on their hands as they ate turkey legs, watching their non-American counterparts digest the risk of financial contagion. When Friday’s mid-day session unfolded, it generated volatile action, taking minds and wallets off the holiday selling.

And just last year, the Dow Jones plunged more than 900 points on Black Friday, when the first reports of the Omicron outbreak in South Africa made the rounds.

Black Friday vs. The Inflation Monster

Investors have come and gone with retail earnings reports this week, highlighting mixed views on the 2022 holiday selling season. Tuesday’s price action showed this conflict up close, with Best buy (BBY) up 12.8% while Dollar tree (DLTR) was pummeled, discharging nearly 8%.

The National Retail Federation forecasts tepid 2022 holiday sales growth of 6% to 8%, up from a whopping 13.5% increase in 2021. The group believes high inflation will force consumers to scale back. gift for less cheaper and cheaper items. However, the labor market remains robust and there are few signs of an increase in credit defaults.

Coupled with easing inflation, consumers may surprise everyone and spend significantly more than expected.

Friday marks the official start of the holiday season, but the announcements have been going on for weeks. And we’re already seeing signs of deep discounts.

The offer will be the main piece of the holiday sales puzzle this year as retailers are saddled with overstock. It happened because they filled their warehouses in early 2022, expecting a major post-pandemic buying spree.

The Russia-Ukraine war has added to supply chain disruptions. Coupled with the massive liquidity injected during the pandemic, the catalysts have triggered the worst inflation in four decades.

Cheap stocks to buy and watch: 5 to watch right now

Stock market moves and shakers

The Innovator IBD 50 ETF (FFTY) was trading down 0.5%.

IBD 50 and Dow Jones component ExxonMobile (XOM) has posted strong returns for 2022, gaining more than 80%.

The fossil-fuel giant reached the buy point of a three-month consolidation pattern in October and moved into tighter action. It is trading just below an all-time high on Wednesday, despite the weak action in energy markets.

IBD 50 biotech leader Pharmaceutical products catalysts (CPRX) consolidated at an all-time high after the explosion of high volume on Tuesday. It is back in the buy zone after a 12.5% ​​rally and could stabilize at a low to high yield price over the next few sessions.

Energy in phase (ENPH) probed the buy point of a cup-and-handle basis early Wednesday, it tested this key level for most of November, but bulls have become more aggressive, perhaps supporting a strong rally thereafter.

Follow Alan Farley on Twitter at @msttrader.


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