Traders work on the floor of the New York Stock Exchange on November 5, 2021.

Spencer Platt | Getty Images

(This article was first sent to CNBC Investing Club members with Jim Cramer. To get real-time updates delivered to your inbox, subscribe here.)

The S&P 500 pulled back during this shortened trading week, largely due to a massive selloff on Friday resulting from renewed COVID fears following news of a new “heavily mutated variant” discovered in South Africa. South. While the economically-sensitive Dow Jones Industrial Average took the hardest hit on Friday, the Nasdaq was the biggest underperforming this week thanks to a rotation out of high tech as the Thanksgiving holiday approached. .

Our strategy

While some of the stocks we saw on Friday were very choppy in nature with stop games like Zoom Video (ZM) and Peloton (PTON) catching an almost automatic bid while the energy and financial names jumped in. been put aside, it’s too early to make a market call one way or another as not enough is known about the new variant. Additionally, trying to gauge sentiment over a half day, when the volume is below normal, may be futile as there is simply not enough market participation.

For this reason, while we gave some thoughts earlier today on areas where we believe members should be looking for opportunities, we chose to sit on the sidelines on Friday and save the money until we have more actionable information from the scientific community.

Under the hood this week, consumer discretionary, communications and tech lead the index lower with most sectors in the red after Friday’s sell-off. For the week, and energy did gain over the period despite Friday’s large losses due to a pop earlier in the week.

What we learned this week

Here’s a quick look at some of the broader market metrics we like to keep an eye out for: The dollar index held around the 96 level. Gold fell back to around $ 1,800. WTI crude prices were hit again on Friday, falling to around $ 70 a barrel. And the 10-year Treasury hovers around the 1.5% level as COVID fears hit the market.

Within the portfolio, we heard from American Eagle Outfitters (AEO). Here is our breakdown of the results.

In addition to earnings, we received some notable macro readings this week.

On Monday, the National Association of Realtors reported that existing home sales rose 0.8% in October, better than the 1.8% monthly drop the streets were expecting. With the October reading, sales are down 5.8% from the previous year. Stock remains a headwind for the housing market, with existing housing stock standing at 2.4 months at the end of October, down from the 2.5-month level in September and well below the 6-month level that many see as balanced between supply and demand. As for affordability, which suffers from the lack of supply, the median price of existing homes in October was $ 353,900 (+ 13.1% yoy). Finally, adding to the affordability dynamic, according to Freddie Mac, the 30-year average conventional fixed mortgage rate was 3.07% in October, down from 2.9% in September.

On Tuesday, IHS Markit Group reported that the Flash US PMI Composite Exit Index for November came in at 56.5, down from 57.6 in October and marking a 2-month low for the index. Similar to the ISM PMI numbers, any reading above 50 represents an expansion of the manufacturing sector, while any value below 50 indicates a contraction. However, IHS Markit data is collected from a different panel of companies than that used for the ISM data source. Additionally, this “Flash” data is based on approximately 85% to 90% of expected survey data – the data used in this report was collected between November 12 and 22.

Leading the figure, the US Services PMI Business Activity Index fell to 57.0 (from 58.7 in October), missing expectations of 59.0, while the US Managers Index purchasing (PMI) in the manufacturing sector rose to 59.1 (from 58.4 in October), matching expectations. In addition, the Flash index of US manufacturing production rose to 53.9 in November (compared to 52.1 in October).

The posts for the rest of the week were all on Wednesday due to markets closing on Thursday and closing early on Friday.

For starters, we learned that new orders for manufactured durable goods fell 0.5% ($ 1.2 billion) in October to $ 260.1 billion. The reading missed expectations of a 0.2% lead. Excluding transportation equipment, which can increase monthly volatility due to higher prices for planes and automobiles, new orders rose 0.5% in October. Excluding defense equipment, new orders rose 0.8% in October.

It is important to note that new orders for basic capital goods (non-military capital goods, excluding aircraft), which are tangible goods used in the manufacturing process (not sold to consumers) and therefore used as a proxy confidence in business and investment, fell 0.5% in October, missing expectations for a monthly advance of 0.5%. Shipments of basic capital goods rose 1.5% in October, well above expectations of a 0.5% increase.

In addition, the Bureau of Economic Analysis (BEA) released its second estimate that real gross domestic product (GDP) grew 2.1% in the third quarter of 2021, a slight failure from expectations of an increase of 2.2%. This follows a 6.7% increase in the second quarter. Additionally, the core personal consumption expenditure (PCE) price index – an important metric to watch as the core PCE price index is the Fed’s preferred proxy for inflation and therefore can provide insight future stock rates – QoQ rose 4.5%, a deceleration from the 6.1% gain in QoQ observed in the second quarter. On an annual basis, the core PCE price index rose 3.6%, an acceleration from the 3.4% year-over-year advance seen in the second quarter.

The BEA also reported that personal income rose 0.5% ($ 93.4 billion) in October, better than expectations of a 0.2% increase. Disposable income (DPI) increased 0.3% ($ 63.0 billion) and personal consumption expenditure (PCE, that is, personal expenditure) increased 1.3% (214 , 3 billion) over the month, ahead of 1.0% expected. After adjusting for inflation, real DPI fell 0.3%, real PCE rose 0.7%, and the PCE price index rose 0.6% in October. Finally, on an annual basis, the core PCE price index – again, the Fed’s preferred measure of inflation – rose 4.1% year-on-year, in line with expectations and significantly accelerating from at the annual rate of 3.7% observed in September.

Also on Wednesday, the Census Bureau reported that new home sales of single-family homes rose 0.4% mo on October to reach a seasonally adjusted annual rate (SAAR) of 745,000, lower than expected for a SAAR of 800. 000. Despite the advance in October, sales were down 23.1% compared to the same period a year earlier. Additionally, the median selling price for new homes in October was $ 407,700, while the average selling price was $ 477,800, compared to $ 405,700 and $ 457,200, respectively, in September.

Finally, the US Department of Labor reported that during the week ending Nov. 20, initial jobless claims were 199,000, representing a weekly drop of 71,000, and was well below estimates of 260,000. In addition, this was the lowest level of initial claims since November 15, 1969, when it stood at 197,000. The previous week’s reading has been revised up to 270,000, against 268,000 previously reported.

Importantly, the four-week moving average, used to smooth weekly volatility, stood at 252,250, down 21,000 from the revised average of 273,250 the previous week (revised by compared to previously reported 272,750). This represents the lowest level of the moving average since March 14, 2020, when it was 225,500.

What we look forward to

Looking ahead, the earnings season continues into next week, within our portfolio we will hear from Salesforce on Tuesday after the closing bell; and Marvell Technology (MRVL) Thursday, after the closing bell.

Here are the earnings for the coming week that we will be watching:

Mon 11/29

Open: Frontline (FRO), Li Auto (LI)

Mar 11/30

Open: Baozun (BZUN), Hello Group (MOMO), Jinko Solar (JKS)

Close: Salesforce (CRM), Ambarella (AMBA), Box (BOX), Hewlett Packard Enterprise (HPE), NetApp (NTAP), Zscaler (ZS)

Wed 12/1

Open: Patterson Companies (PDCO), Royal Bank of Canada (RY)

Close: (AI), CrowdStrike (CRWD), Descartes (DSGX), Elastic (ESTC), Five Below (FIVE), Okta (OKTA), PVH (PVH), Semtech (SMTC), Snowflake (SNOW), Splunk (SPLK), Synopsys (SNPS), Veeva Systems (VEEV), Zuora (ZUO)

Thursday 12/2

Open: Dollar General (DG), GMS (GMS), Kroger (KR), SecureWorks (SCWX), Signet Jewelers (SCWX)

Close: Marvell Technology (MRVL), Asana (ASAN), Cooper (COO), DocuSign (DOCU), Domo (DOMO), Ulta Beauty (ULTA), Ollie’s Bargain (OLLI), Verint Systems (VRNT)

Fri 12/3

Open: Big Lots (BIG), Dole plc (DOLE), Genesco (GCO), Hibbett (HIBB)


On a macroeconomic level, in addition to keeping an eye on the geopolitical sphere, we will be monitoring the following releases (all weather ET):


10:00 am Pending house sales

10:30 Dallas Fed Index


9:00 FHFA House Price Index

9:00 am S & P / Case-Shiller House Prices

9:45 Chicago PMI

10:00 am Consumer confidence


8:15 am ADP employment survey

9.45 a.m. Markit PMI Manufacturing SA (final)

10:00 Construction expenses

10:00 ISM Manufacturing

14:00 FED Beige Book


08:30 am Unemployment claims


08:30 Jobs report

9:45 Markit Services PMI

10:00 Durable orders

10:00 Factory orders

10:00 ISM non-manufacturing OEA, CRM, MRVL

The CNBC Investing Club is now the official headquarters of my charity. This is the place where you can see every move we make for the portfolio and get my market snapshot before anyone else. The Charitable Trust and my writings are no longer affiliated with Action Alerts Plus in any way.

As a CNBC Investing Club Subscriber with Jim Cramer, you will receive a Trade Alert before Jim completes a trade. Typically, Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust portfolio. If the trade alert is sent before the trade, Jim waits 5 minutes after the market opens before executing the trade. If the trade alert is issued less than 45 minutes during the trading day, Jim executes the trade 5 minutes before the market closes. If Jim has mentioned a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. See here for investment disclaimer.

(Jim Cramer’s Charitable Trust is long AEO, CRM, MRVL.)

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