Happy early masked Thanksgiving to all Slopers.
Now make sure to read this post from at least 6-feet away from your electronic device of choice to prevent infection..
As well as to keep the gravy and cranberry sauce off the screen :-P.
THANKSGIVING WEEK TRENDS
To our beloved bear leader’s bane, Thanksgiving week and the rest of the calendar year shows bullish tendencies in the 21st Century. Especially in a certain index that TK has laser focused on.
Updating the information you learned from last year’s post, the bulls added another notch to their new century belts with closes in all four major stock indices ($SPX, $NDX, $DJI, $RUT) above their opens for Thanksgiving week 2019. With the “David” of the indices holding its lead over the metaphorical “Goliaths,”
Here’s a look at where trading this week in the 21st Century stands:
Russell 2000: 14-6
SPX, DJIA, NDX: 12-8
As of the cash close on Monday, only the NASDAQ 100 closed beneath its cash session open. And the Russell once again outperformed its larger brothers on a percentage gain basis.
THANKSGIVING WEEK THROUGH END OF YEAR TRENDS
When you zoom out to the larger, swing trading view… the granddaddy of the indices held onto its slim lead when looking at the setup of where each indices closes its year versus the close of the week before Thanksgiving.
Each of the big four ended 2019 higher than where each closed on the Friday prior to Thanksgiving. So here’s a lookat where each stand for the 21st Century:
SPX, RUT: 15-5
What may surprise some of you is how consistently bullish the small caps perform into the end of the year. Some traders theorize that the seasonal influence of the U.S. Dollar being bullish during the first two months of the fourth quarter plays an outsized role.
Many white papers (such as this often cited one) make the argument that since small cap companies receive an outsized share of their sales from within the U.S., a strong dollar benefits or at least strongly insulates them from dollar value fluctuations.
This runs counter to large multinational corporations that make up the S&P 500, which receive far more overseas revenue.
However, that number itself has been shrinking. According to an analysis by Goldman Sachs ($GS), the total amount of sales that S&P 500 companies received from international business fell to just 29% for all of 2019. That’s down from 30% in 2018, as more companies pivot to Asia from Europe.
So while the small caps still rule the end of the year so far in the 21st Century, their dominance may flip should the big boys trend of adding more U.S. based sales percentage accelerates.