Are we set for a market rally into the New Year?

With the Election result and distortions now baked into the market the immediate focus is moving to the Economic news with at least one eye on bond yields as they respond to what Trump's policies could mean for inflation. The recent wholesale prices release showed that price rose 0.2% in October, annualised rate of 2.4%. This week, Tuesday Consumer confidence numbers were the best for 16 months, and Wednesday's Personal Consumption Expenditure (PCE) figures for October - supposedly the FEDs preferred measure - was +0.2% on the month and +2.3% for the year. The annual figures was slightly higher than September's +2.1% but still probably leaves scope for a December interest rate cut. A strong Black Friday weekend could see the markets rally for a while.

The US Indexes were all down on Wednesday pulled down by the Mag7 which were -0.8% on the day. The VIX was down 1 at 14, this seems too low considering the recent market swings. The main indexes on Wednesday were; DJIA -0.31%, S&P 500 -0.38% and Nasdaq -0.6% (Mag7 -0.8%). On an equal weighted basis (our measure) the overall market was +0.67%. Breadth of 54% (daily range of 22% to 71% over the last 10 days). Daily volumes of 8b (the range since the election is 8b to 13b). 

Daily returns on Tuesday: Mag7 -0.81% (GOOGL +0.1%, AMZN -1%, NVDA -1.1%, MSFT -1.2%, TSLA -1.6%), large cap flat, medium cap -0.1%, small cap +0.5% and micro cap +1.1%.

Week returns as follows - equal weight basis: Market +4%, Mag7 -1% ( AAPL +2.6%, MSFT +2%, AMZN +1.4%, GOOGL -3.8%, NVDA -7.2%), large cap +2.3%, medium cap, +3.7%, small cap +4.7% and micro cap +5.1%. 

Sector wise it was an unusual day on Wednesday with only Industrials in negative territory. Healthcare was the top performer again and is now +6.65% over the last week albeit it is still lagging the wider market by c4% since the election. Technology recovered, having been the worst performer on Tuesday, driven by Blockchain +8.3%, Online Services +1.4%, IT Services +0.9%. Semicon was -0.1%. Energy sector slightly underperformed the market, Renewable Energy Equipment was +2.8% (+14% on the week) and Renewable Fuels +0.8%, Uranium was -0.6%. In Basic Materials Gold +0.3%, Silver +0.2% and Aluminum -1.5% all underperformed the market. Iron & Steel +0.9% and Mining Support +2.7%. Utilities underperformed the market, though all sub sectors were up on the day. In Consumer Cyclicals both Retailers and Cyclical Consumer Products beat the market. Within Industrials, Aerospace +1.2% (+9.4% on the week) was not enough to offset general softness elsewhere in the sector.

A notable number of 52 week highs was seen in the following sectors: Consumer Cyclicals very strong (across there sector but Hotels and Media & Publishing very strong), Financials, exceptionally high number, particularly Banking & Investment Services. Real Estate particularly Commercial REITs and Technology very strong (Software & IT Services, Technology Equipment), Utilities (across the sector ex Water).

Notable high volumes in all sector: High levels in Basic Materials (Metals & Mining) Consumer Cyclicals (across the sector), Financials (across the sector), Healthcare (across the sector), Industrials (across the sector) and Technology saw a very high number (Software & IT Services, FinTech and Technology Equipment)