In an intra day update Gorilla Trades strategist Ken Berman, while commenting on the improvement in the European COVID-19 situation, said:
European COVID-19 Situation Improving
The major indices are all trading significantly higher at midday, adding to yesterday's lofty gains in early trading. Global risk assets have been enjoying strong inflows for the second day in a row, thanks to the continued improvements in the European COVID-19 situation. The domestic numbers got worse again today following yesterday's dip in the number of new cases, but even though the pressure on the U.S. health care system continues to mount, the fact that the containment measures are working in Europe boosted investor confidence globally.
In economic news, the IBD/TIPP economic optimism number slightly missed the consensus estimate, dipping below 50 for the first time since 2016, but the JOLTS job openings estimate was much better-than-expected, still not fully reflecting the effects of the pandemic. German industrial production and Italian retail sales also beat the consensus estimates, triggering a bounce in the struggling euro, but the European financial system remains under pressure, as the leaders of the European Union (EU) still couldn't agree on a common solution to the financing problems of the Union.
- Dow: 23,303, + 623 or 2.7%
- S&P 500: 2,727, + 64 or 2.4%
- Nasdaq: 8,046, + 132 or 1.7%
- Russell 2000: 1,162, + 23, or 2.0%
Market breadth has been slightly weaker than yesterday, but nevertheless, the short-term bullish momentum is healthy, with advancing issues outnumbering decliners by a more than 5-to-1 ratio on the NYSE. 18 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 9 stocks hit new 52-week highs. The major indices have been trading below their VWAPs (Volume-Weighted Average Price) for most of the morning session, warning of a possible intraday reversal. The fact that cyclical issues remained strong this morning is a plus for bulls, but tech stocks showed weakness, which is something to keep an eye on this afternoon. Stay tuned!