SPX500 Cautious Start to the Black Friday Week

NAS100 Analysis

Markets in the US gear-up for a shortened week due to the Thanksgivings Day, while a day later, Black Friday kicks-off the holiday-shopping season. This comes just after US retailers such as Walmart (WMT.us) and Macy’s, reported encouraging financial results and guidance. Others like Target (TGT.us) though, disappointed markets, expecting a challenging last stretch to the year.

Despite the upcoming holiday however, sentiment is poor today, as markets monitor the pandemic situation in China. Covid-19 cases in the world’s second largest economy are on the rise, with the first deaths in a while reported in the mainland, over the weekend.

Investors also try to assess the Fed’s next move on rates, after last week’s speeches revealed that some policy makers are considering smaller hikes, but overall expect more tightening ahead. Wednesday’s minutes of the last policy meeting, may give markets the opportunity to get more Insights into the intentions of policy makers.

SPX500 dropped last week after its recent rally and the new one starts on the defensive, which creates risk for further pressure towards the key 3,850-33 region. This includes the EMA200 and the 38.2% Fibonacci of the September Low/November High rise, but a significant deterioration in sentiment will be needed for daily closes below it, that would bring 3696 in the spotlight.

Despite the cautious mood today, SPX500 had defended the daily Ichimoku Cloud during last week’s slide and above it, bulls remain in control. As such, they have the chance to push for higher highs (4.045), but don’t seem ready for a bigger advance that would challenge the descending trendline from January’s record peak (at around 4,120).