Weekly Wrap-Up: OPEC Boosts Energy Stocks, Tech Shares Lag

Energy stocks boomed on the Organization of the Petroleum Exporting Countries (OPEC) production cut announcement, while lagging tech shares weighed on the Nasdaq Composite (COMP)

by Karee Venema |

Published on Dec 2, 2016 at 1:55 PM
Updated on Dec 2, 2016 at 2:05 PM

Energy stocks were all the rage this week, as oil prices shot higher after the Organization of the Petroleum Exporting Countries (OPEC) announced its first production cut agreement in eight years. While crude futures fluctuated in Friday's trading, the January-dated contract was still on track for a roughly 12% weekly gain. Not surprisingly, several oil-and-gas stocks participated in the sector-wide surge -- including Dow stock Chevron Corporation (NYSE:CVX) -- which rallied to a fresh multi-year peak -- and Chesapeake Energy Corporation (NYSE:CHK), which took aim at crucial chart resistance. And while the United States Oil Fund LP ETF (USO) surpassed two key technical levels, there are still several energy stocks staring down seasonal speed bumps (while this pair of insurers could be due for historical tailwinds).

Retailers also joined in on the volatile price action, with Cyber Monday sales hitting a new record, and a number of retail stocks responding to the rash of quarterly earnings that were released throughout the week. While Schaeffer's Senior V.P. of Research Todd Salamone was keeping a close eye on these critical SPDR S&P Retail ETF (XRT) levels, shares of Tiffany & Co. (NYSE:TIF) were soaring to a new annual high in the wake of the luxury retailer's well-received results. Not all retail stocks fared as well as TIF or Five Below Inc (NASDAQ:FIVE), though. Just ask American Eagle Outfitters (NYSE:AEO) or Dollar General Corp. (NYSE:DG), which plummeted on dismal same-store sales numbers. Retail earnings will continue to hit the Street next week, with yoga apparel maker Lululemon Athletica inc. (NASDAQ:LULU) among the many names set to report.

Meanwhile, the major U.S. benchmarks continued to linger in record-high territory and settled November with impressive monthly gains -- sparking notable put buying on the CBOE Volatility Index (VIX) -- with the Dow, S&P 500 Index (SPX), and Russell 2000 Index (RUT) all carving out all-time peaks. The Nasdaq Composite (COMP) also hit a record best on Tuesday, before starting a sharp tech-driven decline. The COMP's move lower -- with the index set to log a roughly 2.6% weekly loss -- seems to have been driven be an about-face in so-called "FANG" stocks, as well as concern over cooling demand for Apple Inc.'s (NASDAQ:AAPL) iPhone 7.

Although shares of AAPL edged up on Friday, despite reports the tech titan has asked overseas suppliers to reduce iPhone 7 production, Schaeffer's Senior Equity Analyst Joe Bell, CMT, unveiled two key technical levels that could weigh on AAPL in the near term. The SPX is also set to join the COMP in logging a post-Thanksgiving week loss, which could spell near-term trouble for stocks -- as could this small-cap signal -- if history is any guide.

Heading into next week, bank stocks could continue garner a fair share of attention ahead of the Federal Reserve's December Fed meeting, scheduled for Dec. 13-14. Although expectations are high that the central bank will raise interest rates for the first time in a year, some speculators this week took a defensive stance via Financial Select Sector SPDR ETF (XLF) long put options.

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