U.S. Stocks Struggle To Open The Week

It has been a rocky morning on Wall Street as U.S. stocks have slipped to open the trading week. At the midpoint of the session, the DJIA DOW (-300), S&P 500 SPX (-22), and NASDAQ (-53) are all in the red. On the surface, there aren’t a whole lot of reasons for the pullback. COVID-19 vaccines are expected to be approved within days and accommodative Fed policy is the new norm. For now, today’s selloff is likely a product of sectoral profit-taking.

This morning has brought a few items worthy of note. Here is a quick look at the highlights:

Event                                                                             Actual           Projected           Previous

Chicago Purchasing Managers’ Index (Nov.)              58.2                 59.0                  61.1

Dallas Fed Manufacturing Business Index (Nov.)      12.0                  7.4                   19.8

Pending Home Sales (MoM, Oct.)                                 -1.1%               1.0%               -2.0%

The key figure in this group of metrics is the downturn in the Dallas Fed Manufacturing Business Index (Nov.). Although the report came in well above expectations (7.4), it’s still down big from October’s numbers. While the downturn is probably seasonal, the month-over-month lag isn’t good news for those closely monitoring the COVID-19 recovery. And, the November slump isn’t doing much for U.S. stocks.

U.S. Stocks Retrace To Close November

Today is the final trading day of November. For U.S. large-cap stocks, it has been a rough session. However, the weekly chart below shows us that December E-mini S&P 500 futures are firmly in bullish territory.

Here are two levels to watch as the week unfolds:

• Resistance(1): All-Time High, 3668.00
• Support(1): 38% Current Wave, 3498.75

Bottom Line: Be on the lookout for enhanced volatility in U.S. stocks as December gets underway. If we see a pullback in the E-mini S&Ps, a buying opportunity may come into play.

Until elected, I’ll have buy orders in the queue from 3500.75. With an initial stop loss at 3488.75, this trade produces 48 ticks on a standard 1:1 risk vs reward ratio.