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Economic and Stock Market Commentary: November 22



The US investment markets will be closed, Thursday, November 25th for my favorite holiday – Happy Thanksgiving! The markets also will close Friday, November 26th, at 1 PM.

As for the stock market specifically:

We saw a split decision last week where two of the major market averages fell, and two of them gained. The Nasdaq Composite had a very strong week and now is within striking distance of overtaking the S & P 500 for the annual lead. The S & P 500 also was a gainer for the week, while the Dow Jones Industrial Average and international stocks fell.

Meanwhile, “our friends in Washington” passed another bill that only “sober politicians” could do.

Since there are new readers, I don’t use the term spending like drunken sailors since drunken sailors spend their own money, and stop when they are out of money, while our “sober politicians aka our friends in Washington” continue to spend other people’s money even when their pockets are empty.

I ran across something very interesting in my research this weekend. This past week saw more than 400 stocks in the Nasdaq Composite make 52-week lows. That is a record number of 52-week lows, despite the index finishing the week at a record high.

Normally I would have some analysis based upon index composition. However, with the small-cap indices near record highs, I can’t attribute this dichotomy to market capitalization. Examining the data further showed no predictive power in this statistic.

It was a rough week for the bullish percent indicators. The NYSE and Optionable indicators each fell nearly four percentage points. The OTC indicator fell more than three percentage points. We aren’t ready to flip yet, so we shall stay with WEALTH ACCUMULATION for client money.

Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of November 19, 2021 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Commerce announced October retail sales rose by 1.7% compared to September. This was better than the CPI change during the same month. The new scapegoat – the broken supply chain – is getting some credit for the jump. The theory is that we are in the midst of panic buying before the supply shortages worsen. That said, over the weekend I saw many stories about the supply chain coming back to normal. They cited as evidence only about 80 ships anchored off the Long Beach and Los Angeles as compared to about 100 a month ago. Perhaps the shipping companies decided that anchoring off these ports for a prolonged time was less desirable than sailing to other ports, perhaps through the Panama Canal to the Gulf Coast and southeastern Atlantic coast ports.

Federally backed mortgage buyers Fannie Mae and Freddie Mac announced new home loan values they will back in 2022. The new limits will be $650,000 in most areas, while some other areas will be eligible for loan backing up to $1,000,000.

Please call me if you have any questions.