Thanksgiving Week Gains Continue to Pile Up

Investors are enjoying an early Thanksgiving feast as the indexes moved higher for the fourth straight day. The positive action was driven by growing hopes of a Fed rate cut, less concern about the AI-sector valuation, strength in retail, and an upbeat holiday mood. 

The bears have stepped aside rather than fight the optimism, and some FOMO and poor positioning are helping the bullish case. There is now around an 85% chance of a quarter-point cut on December 10, and that is all the bulls need to keep buying.

Positive action around the Thanksgiving holiday is well-known seasonality, so when it starts to occur, it attracts folks who don’t want to be left out, which makes it self-fulfilling to some degree.

The shift in the competitive landscape of AI, with Alphabet  (GOOGL)  emerging as an alternative chip supplier to Nvidia  (NVDA) , helped shift the debate away from valuation and back to potential growth and spending. The bears are still promoting the bubble theme, but recent volatility and leadership reshuffling undermine their arguments.

There is a half-day session with the market closing at 1 p.m. ET on Friday. Volume will be light, but historically it is a positive day. However, with the big run-up we have already seen this week, there is a danger of some selling before the traditional weakness that hits on Cyber Monday.

The good news is that we have some clear support on the charts now. As long as stocks do not breach recent lows, technical conditions will be good for a continuation of this rally. A little pullback and some rest would be healthy as long as those lows do not come back into play.

I’d like to wish everyone a Happy Thanksgiving. I am truly thankful that I have the privilege to help readers navigate the stock market. I will have a special column on Thanksgiving Day.

At the time of publication, Rev Shark had no positions in any securities mentioned.