Reading Tea Leaves…| November 25, 2022

AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA®
TITLE:       Investment Adviser Rep – CCO
TAGS:   S&P 500, NASDAQ, Oil, China, FRB, volume

Low volumes resulted in gains last week. Can reading those tea leaves tell us what to expect this week?

Monday   S&P 500 0.39% | NASDAQ 1.09%

It was a soft start to the week as market volumes were down 25% from the norm. Rumors circulated that Saudi Arabia was planning to increase production, weighing on oil prices. Late in the day they denied the claims. The strength on the day was in consumer defensive names.

Tuesday   S&P 500 1.36% | NASDAQ 1.36%

Oil prices rebounded on Tuesday, but likely could have gained more. China Lockdowns weighed on the oil rally as an increase of energy consumption remains in question. Tuesday volumes were on par with Monday.

Wednesday   S&P 500 0.59% | NASDAQ 0.99%

Federal Reserve Board (FRB) minutes led the markets higher on Wednesday. Their minutes showed that a slowing pace of increases in coming meeting would be appropriate. Oil lost ground today on stresses from China’s lockdowns. Volumes were about 20% lighter than Monday and Tuesday and nearly 40% down from normal volumes.

Thursday   S&P 500     -%   | NASDAQ     -%

Happy Thanksgiving!

Friday  S&P 500 0.00% | NASDAQ 0.52%

The dollar drove markets into the red on Friday. China reduced a key financial requirement, effectively providing monetary accommodation to their economy. The strength in the dollar also aided an early rally for Oil that faded as the day progressed. With holiday shortened hours volume ended up around 70% below normal levels.

Conclusion   S&P 500 1.53% | NASDAQ 0.72%

We next to never talk about market volume; however, holiday shortened weeks usually reflect low volumes. Low volumes usually mean higher volatility. While volumes were light, they actually proved to be more bullish this go-around. Usually, the week following will reflect a reversal, so not much should be expected this week.

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