Commenting on investors shrugging off the negative COVID-related headlines and today’s trading. Gorilla Trades strategist Ken Berman said:
The major indices are virtually unchanged at midday following an active morning session on Wall Street. The world and the U.S. saw another spike in the number of COVID infections over the weekend, and that led to a bearish start to the week in Asian and European trading. While the main European benchmarks closed in the red, U.S. stocks continue to be relatively strong, bouncing back hard with the help of the mighty tech sector. The Nasdaq I got close to its all-time high again in early trading, despite the uptick in global safe-havens, such as gold and Treasuries.
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Bulls Lead As Negative COVID-Related Headlines Get Shrugged Off
In economic news, existing home sales came in at an annualized 3.91 million units, well below the consensus estimate, with the measure hitting its lowest level since mid-2010. Technicals continue to support the bullish case, at least at the level of the major indices, and the fact that investors shrugged off the negative COVID-related headlines is a plus for bulls. The Volatility Index (VIX) pulled back sharply this morning too, and while some of the crucial sectors, such as financials remain troublingly weak, the recovery is still on track.
Dow: 25,893, + 22 or 0.1%
S&P 500: 3,100, + 2 or 0.1%
Nasdaq: 9,995, + 49 or 0.5%
Russell 2000: 1,419, + 1 or 0.1%
Market breadth has been relatively weak this morning, despite the rally off the overnight lows, with decliners outnumbering advancing issues by an almost 3-to-2 ratio on the NYSE. Only 8 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 92 stocks hit new 52-week highs. The major indices have been trading above their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday buying pressure. Utilities, materials, and tech stocks have been leading the way higher today, but the real estate, healthcare, and industrial sectors were week, and since consumer-related and energy stocks have been lagging the broader market too, the outlook for the afternoon session is mixed. Stay tuned!