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The Trading Plan for Thanksgiving Week

Serge Berger

Editor’s Note: The Daily Traders Alert and Beat the Bell will not be publishing on Nov. 24 and Nov. 25 due to the Thanksgiving holiday. They will resume their regular schedule on Nov. 27.

And just like that we have arrived at Thanksgiving week. For U.S. stock market participants, this week usually means that doing less is more, i.e. better. Patience will be key this week more than usual and I would be remiss not to remind you that boredom is not an actionable catalyst to enter trades or investments. In other words, this week if you are looking to escape family activities for an hour here or there the stock market should not be your excuse — or dare I say the “rescue.”

The Trading Plan for Thanksgiving Week

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For a little reference and perspective, in last week’s opening missive on Nov. 13 I offered that consumer discretionary stocks, i.e. the Consumer Discretionary Select Sector SPDR Fund (NYSEARCA:XLY) looked poised to break out to the upside, and that’s exactly what ended up transpiring.

But it wasn’t only this group of stocks that acted well last week. In fact, we saw bullish reversals in biotechnology and banking stocks as well as the the Russell 2000 as represented by the iShares Russell 2000 ETF (NYSEARCA:IWM), among other things.

Click to Enlarge

Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day

Tactically I continue to prefer small caps, i.e. the IWM ETF over the S&P 500 as represented by the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) into year-end due to the lack of pause in the SPY versus the IWM in the September — October period, the still relatively bearish futures positioning in the Russell 2000, as well as the relatively favorable impact a strengthening US dollar could have on small caps.

Technically speaking, on the charts we see that the consolidation of recent weeks was constructive in that it held above the breakout point from September, i.e. the top end of blue box.

While no breakout of this consolidation phase has yet occurred, this is a constructive chart if considered with the aforementioned points.

Click to Enlarge

Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day

Another one of my Q4 themes that I continue to discuss with Clubhouse members on a daily basis and also continue to like is that of still somewhat higher oil prices into year-end, for now. The oil price as represented by the United States Oil Fund LP (NYSEARCA:USO) in the second half of last week signaled a bullish reversal that if it can last would likely also continue to provide a bid in energy related stocks.

Conclusion for This Thanksgiving Week

In summary, barring any major outside news I want to respect the bullish reversals that took place last week in the aforementioned parts of the market, particularly as the week of Thanksgiving does have a good tendency to see at least marginally higher prices, or at least no large melt down.

Check out Serge’s Trade of the Day for Nov. 20.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

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