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Nov. 16, 2019, 1:28 p.m. EST

These highflying stocks hold big clues to a broader year-end rally

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By Barbara Kollmeyer, MarketWatch


AFP via Getty Images
Look up!

After Wall Street stocks closed out last week at record highs, a breather seems to be in store.

Investors appear cautious on Monday after violence ramped up in Hong Kong (see below) and President Donald Trump spoke of slow trade-talk progress over the weekend. Of course, it would only take a positive trade-related comment or two to jump-start equities again.

Meanwhile, talk is starting to make the rounds of a so-called Santa rally that has typically—but not last year—powered gains at the end of December. Our call of the day from Miller Tabak + Co.’s lead strategist Matt Maley, says if you want to know if equities have some juice left this year, look to one bullish sector for clues.


MarketWatch
Up and away

“At its highs from last week, the SMH semiconductor ETF /zigman2/quotes/200571902/composite SMH +1.48%  [VanEck Vectors Semiconductor ETF] closed 7.8% above its old record highs, so that definitely qualifies as a ‘meaningful’ breakout,” said Maley, in a note to clients. That last bit refers to when a stock moves up—in this case, as it can also be down—after a period of moving sideways.

Maley said chip stocks are starting to look a bit overbought, meaning a decline may be on the horizon, though that would have to be severe before it becomes a problem.

And if those stocks follow that with yet another higher-low/higher-high sequence—technical moves that indicate a stock or group of stocks are headed up—it “will be very bullish for the entire stock market,” says Maley.

Read: Deutsche Bank says this is the biggest risk to stocks in 2020

The market

Bond markets are closed because of the Veterans Day holiday, which means no economic data. Dow /zigman2/quotes/210598065/realtime DJIA +1.09% , S&P /zigman2/quotes/210599714/realtime SPX +0.95%  and Nasdaq /zigman2/quotes/210598365/realtime COMP +0.95%  futures are down, along with European stocks /zigman2/quotes/210599654/delayed XX:SXXP +1.08%  and oil .

Read: Iran discovers massive new oil field

The chart

Asia stocks fell across the board, led by the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +1.07% , shown in our chart of the day, after Hong Kong police shot an antigovernment protester amid escalating violence.

Plus: China consumer prices hit 8-year high, thanks to soaring pork prices

/zigman2/quotes/200571902/composite
US : U.S.: NYSE Arca
$ 133.98
+1.95 +1.48%
Volume: 722,220
Dec. 6, 2019 10:52a
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,978.25
+300.46 +1.09%
Volume: 60.36M
Dec. 6, 2019 10:52a
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,147.06
+29.63 +0.95%
Volume: 403.45M
Dec. 6, 2019 10:52a
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
8,652.32
+81.62 +0.95%
Volume: 556,729
Dec. 6, 2019 10:52a
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
407.00
+4.34 +1.08%
Volume: 0.00
Dec. 6, 2019 4:37p
loading...
/zigman2/quotes/210598030/delayed
HK : Hong Kong Exchange
26,498.37
+281.33 +1.07%
Volume: 1.64M
Dec. 6, 2019 4:08p
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