Ad the Russell 2000 Index (INDEXRUSSELL: RUT) hit an almost one-month high today, commenting on today’s trading Gorilla Trades strategist Ken Berman said:
Q4 2019 hedge fund letters, conferences and more
Russell 2000 Index (INDEXRUSSELL: RUT) Outperforms Large-Cap Benchmarks
While the overnight session was nothing short of scary stocks held on to most of yesterday's gains and small-caps even extended their winning streak. The Russell 2000 Index (INDEXRUSSELL: RUT) hit an almost one-month high today, finishing higher for the fourth day in a row while outperforming the large-cap benchmarks, and since the Volatility Index (INDEXCBOE: VIX) also remains low, investors still seem to be hungry for risk.
The ExodusPoint Partners International Fund returned 0.36% for May, bringing its year-to-date return to 3.31% in a year that's been particularly challenging for most hedge funds, pushing many into the red. Macroeconomic factors continued to weigh on the market, resulting in significant intra-month volatility for May, although risk assets generally ended the month flat. Macro Read More
The major indices all finished slightly lower following yesterday's record-breaking session, as the resurfacing coronavirus-related worries halted the bullish stampede on Wall Street. The Dow Jones Industrial Average (INDEXDJX:.DJI) was down 128, or 0.4%, to 29,423, the Nasdaq (INDEXNASDAQ:.IXIC) lost 14, or 0.1%, to 9,712 while the S&P 500 (indexsp:.inx) fell by 6, or 0.2%, to 3,374. Advancing issues outnumbered decliners by a less than 5-to-4 ratio on the NYSE, where volume was slightly above average.
Looking at the key sectors, the signs of the sudden overnight risk-off shift are clear despite the intraday rally. The defensive utilities sector was the strongest while energy-related issues suffered, as it has been the case ever since the start of the outbreak. Industrials and healthcare stocks were also under pressure, with consumer goods, tech stocks, financials, and services breaking even. The dollar continued its relentless rally amid the fears of a deep slowdown in China, and the currency finished in the green for the eights time out of nine sessions.
Stocks Recover From An Overnight Selloff
Although stocks quickly recovered from the overnight selloff on Wall Street, the intraday rally in the RUT ran out of steam in the afternoon. That said, since the major indices all closed at record levels yesterday, today's flat session left the strong bullish trend intact. While China's 'new method' of reporting coronavirus cases shook investors' confidence with regards to the containment of the epidemic, there are still only a few cases outside the Asian country.
The market-leading tech sector could get an early boost tomorrow as chipmaker NVIDIA (NVDA, -0.65%) published a strong earnings report in after-hours trading. The company beat on both its top and bottom lines and its guidance was also more bullish-than-expected. Semiconductors had a great fourth quarter, and while we are still missing a few key reports, we can say the same thing about the broader market. While earnings have been stagnating for several quarters now, the first quarter of 2020 might finally see meaningful growth in corporate profits, which could be one of the main reasons behind the current rally in stocks.
The week will end on a very busy note, with regards to economic releases, and the consumer economy will be in focus for the second day in a row. Last month retail sales report confirmed the positive corporate reports concerning the holiday season, with especially core sales blowing away the consensus estimate. Analysts expect another healthy 0.3% increase in sales, but industrial production is forecast to drop for the second month in a row. The pre-market session in the might already see increased activity due to the Eurozone GDP print, while the Michigan consumer sentiment number and business inventories will highlight the morning session.
Large-Cap Benchmarks Remain Well Above Their Rising 200-Day Moving Averages Despite RUT's Outperformane
Technical Corner. With the Dow leaving behind its all-time high from January, the major indices are now all in uncharted territory, and the key trend indicators continue to confirm the bullish underlying trend on Wall Street. The large-cap benchmarks remain well above their rising 200-day moving averages of 8,325 for the Nasdaq, 3,030 for the S&P 500, and 27,141 for the Dow, and the indices are also clearly north of their steeply rising 50-day moving averages of 3,249 for the S&P 500, 9,115 for the Nasdaq, and 28,654 for the Dow.
Analysts have been closely tracking the dollar’s rally in the past couple of weeks, and yesterday, the currency reached another important milestone. The Dollar Index (DXY) closed at its highest level since mid-2017, with the euro losing the most ground among the dollar’s crucial peers. The most-traded asset of the world, the EUR/USD currency pair, plunged below 1.0850, hitting an almost three-year low, and should the trend gather some steam, the two currencies could even get close to parity, which would likely have a major impact on shares of the export-focused U.S. firms. Stay tuned!