Commenting on the fears of a gloomy autumn and today’s trading Gorilla Trades strategist Ken Berman said:
The Fears Of A Gloomy Autumn
The major indices are mixed and flat at midday despite a broadly bullish start to the day on Wall Street. The worrisome European COVID situation continues to weigh on investor sentiment globally, and despite a weak intraday bounce, European assets remain under severe pressure, and that could limit the upside for domestic stocks too. The number of new cases hit a five-week high in the U.S. as well, with the number of deaths approaching 200,000, adding to the fears of a gloomy autumn, which could deliver another blow to the hardest-hit industries.
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In economic news, the Richmond Manufacturing Index posted a huge bullish surprise, with a reading of 21, continuing the positive trend of the past few weeks in the sector. Even though existing home sales also ticked increased, and hit an over 14-year high, the measure still trailed analysts expectations, similarly to last week’s housing starts and building permits. Despite the morning selloff, the large-cap benchmarks are still well above yesterday’s intraday lows, and as sentiment hasn’t been this bearish since June, a short-term reversal could be near.
Dow: 27,057, - 91 or 0.3%
S&P 500: 3,285, + 4 or 0.1%
Nasdaq: 10,800, + 21 or 0.2%
Russell 2000: 1,478, - 7 or 0.4%
Market breadth has been in line with the performance of the large-cap benchmarks this morning, with advancing issues outnumbering decliners by a 5-to-4 ratio on the NYSE at midday. 27 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 21 stocks hit new 52-week highs. The major indices have been trading below their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday selling pressure. The real estate and industrial sector have been boosted by this morning’s economic release, but price action remains dominantly bearish, despite yesterday’s bounce in the tech sector, as financials continue to bleed lower. Stay tuned!