Stocks Take a Break from “Trump Rally,” Market Dashboard Holds Steady


Weekly Market Summary

U.S. stocks took a break this week from their “Trump rally.” Growing political uncertainty in Italy, as well as lukewarm domestic jobs data, had investors tapping the brake. The U.S. economy added enough jobs in November to raise expectations that the Federal Reserve will boost interest rates at its policy meeting later this month. The Dow Jones Industrial Average (DJIA) managed to notch its fourth consecutive weekly win, mainly on the backs of rebounding energy stocks. Oil prices rallied this week after the Organization of the Petroleum Exporting Countries (OPEC) announced its first production cut agreement in eight years. However, most broad market indexes ended the week in the red.

The Dow Jones Industrial Average (DJIA) eked out a weekly win by adding 0.1% to close at 19,170.42. After breaking out of its narrow trading range last week, the blue-chip index seems to have settled into another trading range, with the 19,200 level seemingly offering some near-term resistance. As we said a couple of weeks ago, trading ranges such as this are often a precursor to a major move. Either buying pressure is building and the index will break out to the upside or buying momentum has run out of steam and we will see prices retreat. Only time will tell. We look to the 19,000 level for key psychological support, followed by the 18,900 level, which served as a minor resistance point a couple of weeks ago. For November, the Dow climbed 5.4%.

The S&P 500 Index (SPX) ended the week down 1.0% at 2,191.95. The large-cap index was not able to hold the ground north of 2,200 and we will wait to see if that becomes a near-term resistance point. We look to the 2,180 level for initial support, as it was a former resistance level. Below that is the 2,165 level, which provided support a couple of weeks ago. For the month, the S&P 500 index added 3.4%.

Only four of the 10 S&P Sector SPDRs ended the week with gains. Energy (XLE) issues were the biggest winners on news of the OPEC production cut, as the sector climbed 2.9% this week. Technology (XLK) was the biggest loser, shedding 2.7% this week. For November, Financials (XLF) and Industrials (XLI) were the strongest sectors, adding 14.0% and 9.1%, respectively. Only three sectors were down in November, with Utilities (XLU) lagging them all with a 5.4% loss.

The broad market Wilshire 5000 (W5000) lost 1.0% this week and closed at 22,928.72. The index flirted with the 23,000 level for several days before moving below it. We will wait to see if that will be a short-term resistance point. To the downside, we look to the 22,700-22,800 level for initial support. This range has offered support and resistance over the last several weeks. For November, the Wilshire 5000 added 4.2%.

The tech-laden Nasdaq Composite (COMP) dropped 2.7% this week to 5,255.65. On Thursday the index closed below its 50-day moving average. However, this did not seem to trigger program selling, as the index managed a 0.09% gain on Friday. The index did fall through near-term support in the 5,320-5,340 range, which had been a resistance point in September and October. We now look for round-number support at the 5,200 level, followed by the 5,050 mark, which offered support previously. Below that is key psychological support level at 5,000. The tech index rose 2.6% in November.

The Russell 2000 (RUT) index of small stocks also underperformed this week on a relative basis, losing 2.4% to 1,314.25. The index did manage to break its four-day losing streak on Friday, clawing out a 0.03% gain. To the downside, we look for psychological support at 1,300. Below that is possible support at the 1,260 level, which had previously been a resistance point. The small-cap index rocketed to an 11.0% gain in November.

The CBOE Volatility Index (VIX) gained 14.4% this week to close at 14.12. The “fear gauge” tumbled 21.9% in November.

Computerized Investing Market Dashboard Indicators

This week, none of the Market Dashboard indicators triggered a new signal, nor did any of the indicators trigger confirming bullish or bearish signals.

To see the current signals of all the dashboard indicators, visit the CI Market Dashboard.

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