In an intra day note, Gorilla Trades strategist Ken Berman, while commenting on the key sectors trading in green despite the cyclical issues, said:
Cyclical Issues Lead The Charge Yet Again
The major indices are all higher at midday following yesterday’s rollercoaster ride as the investor sentiment remains bullish thanks to the encouraging COVID-19-related developments. China reopened Wuhan, the first epicenter of the global pandemic, while most European countries are also reporting slow improvements. While the total number of U.S. cases crossed 400,000, the optimistic comments by White House health advisor Fauci regarding a ‘turnaround’ next week boosted equities in early trading. Cyclical issues have been leading the charge yet again, but the key sectors are all trading in the green.
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
In economic news, crude oil inventories surged higher by more than 15 million barrels this week, matching the most negative forecasts and confirming the historic hit on demand. The price of oil is still higher ahead of the OPEC’s emergency meeting, and the energy sector is also showing stability following yesterday’s volatile session. All eyes were on the Eurogroup meeting today in pre-market trading, but the leader of the EU once again failed to reach on a common debt issuance to tackle the COVID-crisis, putting renewed pressure on the Euro and European equities.
- Dow: 23,221, + 567 or 2.5%
- S&P 500: 2,721, + 62 or 2.3%
- Nasdaq: 8,044, + 157 or 2.0%
- Russell 2000: 1,172, + 34, or 3.0%
Market breadth has been relatively strong compared to the choppy price action in the first hours of trading, thanks to the relatively strong small-caps, with advancing issues outnumbering decliners by a more than 4-to-1 ratio on the NYSE. 12 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 5 stocks hit new 52-week highs. The major indices have been trading above their VWAPs (Volume-Weighted Average Price) for most of the morning session, indicating intraday buying pressure. Tech stocks continue to relative weakness compared to cyclical issues, such as industrials and financials, but the overall picture at the level of sectors is bullish, from a short-term perspective. Stay tuned!