NASDAQ Composite (COMP)
· Performance: The NASDAQ Composite saw a modest gain of 0.2%, closing at 19,003.65.
· Selling Activity: There was minimal selling pressure on the NASDAQ Composite.
· Advancing Stocks: Tech stocks like Apple (AAPL) and Microsoft (MSFT) saw gains, while Nvidia (NVDA) experienced a decline of over 3%.
· Volume: Up volume slightly outpaced down volume, indicating a mild bullish sentiment.
Dow Jones Industrial Average (DJIA)
· Performance: The Dow Jones Industrial Average surged by 1%, closing at 44,296.51.
· Selling Activity: There was no significant selling pressure on the Dow.
· Advancing Stocks: Industrial and consumer discretionary stocks performed well, with Boeing (BA) rising over 4.5%.
· Volume: Up volume significantly outpaced down, reflecting strong bullish sentiment.
S&P 500 (SPX)
· Performance: The S&P 500 rose by 0.3%, closing at 5,969.34.
· Selling Activity: There was minimal selling pressure on the S&P 500.
· Advancing Stocks: Retailers like Gap (GPS) saw significant gains after beating analysts’ estimates.
· Volume: Up volume slightly outpaced down volume, indicating a mild bullish sentiment.
Russell 2000 (RUT)
· Performance: The Russell 2000 index of smaller companies rose by 1.8%, closing at 2,406.67.
· Selling Activity: There was minimal selling pressure on the Russell 2000.
· Advancing Stocks: Small-cap stocks showed strong performance, with EchoStar (DISH) falling after DirecTV called off its purchase.
· Volume: Up volume significantly outpaced down volume, reflecting strong bullish sentiment.
Overall Market Sentiment
· Advancing Stocks: Across all exchanges, advancing stocks outnumbered declining stocks, indicating a generally bullish market sentiment.
· Up Volume vs. Down Volume: Up volume outpaced down volume across all major indices, reflecting strong bullish sentiment.
My Take
NASDAQ Composite (COMP)
· Modest Gain: The index rose by 0.2%, closing at 19,003.65.
· Minimal Selling: There was no significant selling pressure.
· Tech Stocks: Mixed performance with gains in Apple and Microsoft, but a notable decline in Nvidia.
Dow Jones Industrial Average (DJIA)
· Strong Surge: The index increased by 1%, closing at 44,296.51.
· Bullish Sentiment: No significant selling pressure, with strong up volume.
· Leading Stocks: Industrial and consumer discretionary stocks, especially Boeing, showed strong performance.
S&P 500 (SPX)
· Moderate Gain: The index rose by 0.3%, closing at 5,969.34.
· Minimal Selling: Similar to the NASDAQ, there was minimal selling pressure.
· Retailers: Significant gains in retailers like Gap after positive earnings reports.
Russell 2000 (RUT)
· Impressive Gain: The index saw a significant increase of 1.8%, closing at 2,406.67.
· Strong Performance: Small-cap stocks showed strong performance, with minimal selling pressure and strong up volume.
Overall Market Sentiment
· Advancing Stocks: Across all exchanges, advancing stocks outnumbered declining stocks.
· Up Volume vs. Down Volume: Up volume outpaced down volume across all major indices, reflecting a generally bullish market sentiment.
Key Points
· The Dow Jones Industrial Average and Russell 2000 showed particularly strong performance, indicating bullish sentiment.
· The NASDAQ Composite and S&P 500 also experienced gains but to a lesser extent.
· Advancing stocks and up volume outpaced declining stocks and down volume across all exchanges.
Heading into the week of Thanksgiving historically
· Positive Returns: The S&P 500 has shown an average gain of 0.54% during Thanksgiving week over the past 50 years. This is significantly higher than the average weekly gain of 0.16% observed throughout the year.
· Higher Frequency of Gains: About 68% of Thanksgiving weeks have shown positive returns.
· Notable Exceptions: There have been some negative Thanksgiving weeks, such as in 2021 (-2.2%), 2018 (-3.8%), and 2011 (-4.6%).
Trading Volume
· Lower Trading Volume: Trading volume is generally lower during Thanksgiving week due to the holiday. The stock market is closed on Thanksgiving Day and closes early on Black Friday. This reduced trading activity can lead to lower volatility and less dramatic price movements.
Note: My experience indicates many traders and money managers take off early the week of Thanksgiving. Therefore I don’t expect much to happen until they return. They are reluctant to open up new large buy positions before any holiday. Lower volume during the current time is a no-read situation.
“What is free now is valuable—take advantage of it while you can. Soon, to get updates on Upstart and other stocks I follow, you’ll need to sign up. It’s free for now. We frequently update the market and share our insights on the overall market sentiment with investors.”
Upstart
· Closing Price: Upstart closed at $74.06 on Friday, November 22, 2024.
· Volume: The trading volume was 5,640,937 shares, which is lighter than the average volume of 6,890,969 shares.
Analysis
· Lighter Than Average Volume: The trading volume on this up day was lighter than the average volume. This can indicate a lack of strong conviction behind the price movement, suggesting that the upward move might not be sustainable in the short term.
· Market Sentiment: Despite the positive price movement, the lower volume could be a sign that investors are cautious or uncertain about the stock’s future performance.
What I did
Upstart Holdings (UPST)
On Friday, November 22nd “I wrote a November 29th $78 covered call on Upstart on shares that I own and took in $1.80 on. If you’re not experienced in this area, you should not consider doing this.” I keep the $1.80 no matter what, and if it closes below the $78 strike, I can write another covered call and take in more money. But if it closes above $79.80 on November 29th, my option may be exercised.
Analysis
Writing covered calls is a popular strategy for investors who hold the underlying security and want to generate additional income. By selling call options, investors receive a premium (in this case, $1.80) and keep the premium regardless of whether the option is exercised. This strategy can enhance returns but know the risk before doing this.
Benefits
· Income Generation: Investors receive premiums, which can boost overall returns.
· Downside Protection: The premium received can offset some losses if the stock price declines.
· Lower Cost Basis: Collecting premiums reduces the effective cost basis of the stock.
Risks of Writing Covered Calls
1. Limited Upside Potential: If the stock price rises significantly above the strike price, the investor will miss out on those gains because they are obligated to sell the stock at the strike price.
2. Downside Risk: While the premium received provides some buffer, it does not protect against significant declines in the stock price.
3. Opportunity Cost: The investor may miss out on potential opportunities if the stock price remains flat or declines.
4. Volatility Risk: Higher volatility can lead to higher option premiums, but it can also increase the likelihood of the option being exercised.
Who Should Write Covered Calls
· Long-Term Holders: Investors who plan to hold the stock and do not expect significant short-term price increases.
· Income Seekers: Those looking to generate additional income from their stock holdings.
· Moderately Bullish Investors: Investors who believe the stock price will remain below the level of the strike price on the expiration date.
· Risk-Averse Investors: Those who want to reduce their cost basis and have some downside protection.
· Experienced Investors: Know what you are doing before you do this. Consult your advisor. Learning is important!