Will Thanksgiving Be The Week Of Giving?

At this point, it becomes quite clear that a range has been established in the market over the last several sessions. This trading range was between 4,000 and 3,960 on the S&P 500 futures (/ES). Price has been held within this range spanning over the last eight sessions. However, today with a strong close, the range has been broken to the upside. With Thanksgiving on the horizon, will seasonality continue and become the week of giving?

Thanksgiving week is historically positive.

Mary Ellen McGonagle, Senior Manager of Equities at Simpler Trading, noted, “Thanksgiving holiday period the markets have historically performed well. There are also many obstacles this time around, but an upside to end the week is possible with the range breaking. Unfortunately for bulls, even with the range breaking, the upside might not be as clear as they would like. McGonagle has also recognized the challenges of Wednesday’s session to come and has acknowledged that “Wednesday, the Federal Reserve will be releasing notes from their most recent meeting, and any hint of an elevated rate cycle may send the bulls into hiding.” 

Economic data to set havoc on the market.

Because of the short week due to the Holiday, economic data is being all crammed into one day. This volume of data in one session can lead to volatility, with sudden price changes across the market as it reacts to new information. Either way, a lot of weight should be put on tomorrow’s events. 

Tomorrows schedule

Initial and continuous jobless claims are set for release at 8:30 a.m. Eastern, followed at 9:45 a.m. Eastern with the S&P Purchasing Managers Index (PMI) for manufacturing and services. The University of Michigan (UMich) Consumer Sentiment Index will release its data at 10:00 a.m. Eastern. If all of this was not enough, the Federal Open Market Committee (FOMC) minutes hit the market at 2 p.m. Eastern.

Cases for all scenarios

It is important to head into the new session with a thesis for each direction that could take place. Let’s look at what may happen tomorrow and how that can affect the market. 

On the upside, today was the first time the market has closed above 4,000 since September. If the break of this range helps send it higher, the Thanksgiving seasonality can be in play. In addition, if economic data supports it, reports can send the market flying higher. A target of the 200-simple moving average (SMA) at 4,067 remains.

On the downside, this range break could be a fake-out, and with the help of an adverse reaction to economic data, the market could roll over. McGonagle can see “a hint of an elevated rate cycle sending bulls into hiding.” This hint is likely found during the Federal Open Market Committee (FOMC) minutes. A target below would be back to the bottom of the recent range at 3,960. 

The side no one wants to talk about, sideways. There is also the possibility that the reactions to different economic data are mixed and sends the market on a volatile mission for all of Wednesday. 

Stock market closes green 

The Nasdaq and the S&P 500 were positive to close the session. The S&P 500 closed up 1.39%, adding 55 points, while the Nasdaq closed up 1.39%, gaining 152 points. The Dow Jones followed, closing up 1.19%, adding 402 points.