Commenting on the pull back in Chinese stocks and trading at midday, Gorilla Trades strategist Ken Berman said:
Pull Back In Chinese Stocks
The major indices are mixed and flat at midday following a bearish overnight shift and a choppy but positive morning session. Chinese stocks pulled back after gaining the most in years on Monday, dragging other risk assets lower, despite the slight COVID-related improvements. The Nasdaq still hit another all-time high in early trading, despite the global headwinds, with the tech giants leading the intraday rally yet again. The most lockdown-sensitive issues have been suffering this morning as yesterday’s rally fizzled out, with especially travel- and leisure-related issues being under pressure.
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In economic news, the IBD/TIPP sentiment number came in at 44 well below the expected 48.2, but the JOLTS job openings estimate blew away the consensus estimate with a reading of 5.4 million. We got mixed reports from Europe as well in pre-market trading, as although Italian retail sales jumped by more-than-expected, German industrial production missed by a wide margin. Treasury yields edged lower on the long end of the curve due to the mixed numbers, but volatility remains low across asset classes and bulls are still clearly in control on Wall Street.
Dow: 26,133, - 153 or 0.6%
S&P 500: 3,181, + 2 or 0.1%
Nasdaq: 10,507, + 72 or 0.7%
Russell 2000: 1,433, - 10 or 0.7%
Market breadth has been relatively weak this morning, with decliners outnumbering advancing issues by a 7-to-3 ratio on the NYSE. Only 6 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 67 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. Besides the most lockdown-sensitive industries, the key cyclical sectors have also been lagging behind the broader market too, while defensive issues and tech stocks outperformed due to the slightly more bearish investor sentiment. Stay tuned!