Investors and traders are concerned about the new Covid-19 strain discovered in South Africa. The World Health Organization is keeping an eye on a new variant with many alterations to the spike protein, and a special conference is planned for Friday to explore what it may entail for vaccinations and treatments. The new variant is being monitored as Covid cases increase throughout the world in the run up to the Christmas season. The United Kingdom is placing a block on flights from six African nations, including South Africa, beginning at lunchtime Friday.
The B.1.1.529 variety features several mutations linked with greater antibody resistance, which may limit vaccination efficacy, as well as mutations that make it more infectious in general.
Moving away from the top of the new Covid strain, during the current earnings season, retail stocks have made big movements in both directions. Gap and Nordstrom’s stock dropped more than 20% on Wednesday. The main point of attention for retailers was how they are dealing with supply chain difficulties and the soaring inflation situation. It’s also unclear whether the chatter about supply chain concerns prompted people to start their Christmas shopping earlier, potentially hurting fourth-quarter sales.
The last few weeks of the year are normally a solid period for the market. Traders know that during this period stock markets usually sees a Santa Claus rally, which tends to result in a pleasant Christmas season for Wall Street. The S&P 500 is up around 25% year to date.
The Asian stock market traded sharply lower on the final trading of the week. The Nikkei index plunged 2.65%. The Shanghai index decreased 0.54%, while the HSI index fell by 2.33%. The ASX index gained by 1.73%. The Dow Jones’ market breadth lost further momentum. 78% of the Dow Jones stocks traded above their 200-day moving average. The S&P 500 stock breadth also confirmed a decline in momentum. 77% of the shares traded above their 200-day moving average.
The Dow Jones futures are trading lower today. Earlier today, the Dow futures plunged over 400 points. In terms of economic data, investors will be looking at the speech from the President of the European Central Bank, Christine Lagarde. In addition to this, we also have the US Treasury report due later in the day.
The Dow Jones futures have plunged today, and they have also pierced the lower line of the Bollinger Bands, which means that not only do we have higher volatility for the Dow Jones but the price is also oversold. In addition to this, the 50-day SMA on the 4-hour time frame has dropped below the 100-day SMA, which confirms that bears are in the driving seat, and it is likely that the bearish trend may pick up more steam. This could be especially true if the 50-day SMA drops below the 200-day SMA and the 100-day SMA falls below the 200-day SMA.
As for the RSI, it is also indicating that the prices are oversold on the intraday time frame as the RSI has reached the 30-mark which is associated with oversold. The near term support is at 35,047, while the resistance is at 35,907.
Stock Market Rally
- The S&P 500 stock index closed higher Wednesday; the index increased by 0.23%. The communication services sector led the index higher, and 5 out of 11 sectors closed lower.
- The Dow index declined on the last trading day before Thanksgiving, as the US markets were closed yesterday;
- The Dow stocks moved the index lower by 0.03%. 15 shares advanced, while 15 shares closed lower.
- The NASDAQ composite, the tech-heavy index, closed higher on Wednesday and gained 0.44%.
- S&P 500 Leaders and Laggards: HP Inc and Gap Inc
- HP Inc stock contributed the biggest gain, soaring 10.096%. Gap Inc stock was the largest drag; it fell by 24.17%. The S&P 500 stock index is up 25% so far this year.
- Visa Inc provided the biggest help for the Dow Jones; it advanced by 2.39%, while Goldman Sachs was the largest decliner, it fell by 1,76%.