Commenting on the deadly second COVID-19 wave and today’s trading Gorilla Trades strategist Ken Berman said:
The major indices are all sporting considerable gains at midday thanks to a strong overnight rally in risk assets. European banking stocks have been advance following a disastrous week for the sector, and their bounce boosted cyclical issues across the board, with the most COVID-sensitive issues also joining the “party”. The number of COVID infections hit new daily highs globally in recent days as the European outbreaks further accelerated, but as hospitalizations and deaths remain well below the levels seen in the Spring, the fears of a deadly second COVID-19 wave eased somewhat.
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The large-cap benchmarks all hit their highest levels in over a week, and from a technical perspective, they reached very important "resistance" levels. The indices tested their 50-day moving averages in early trading, giving bulls hope that the overbought correction is over. The market-leading tech sector has been slightly weaker than last week today, but should the COVID-related fears ease persistently the bull market could continue with a healthier rally, lifting the sectors that were left behind during the summer months.
Dow: 27,671, + 498 or 1.8%
S&P 500: 3,353 + 54 or 1.6%
Nasdaq: 11,076, + 163 or 1.5%
Russell 2000: 1,511, + 36 or 2.5%
Market breadth has been relatively strong this morning, with advancing issues outnumbering decliners by a 9-to-1 ratio on the NYSE at midday. Only 10 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 46 stocks hit new 52-week highs. The major indices have been hovering around their daily VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to a mixed and choppy afternoon. Financials, industrials, and real estate stocks have been enjoying the strongest inflows in early trading, but all of the key sectors, even the traditional safe havens are trading in the green thanks to the improving sentiment, confirming the broad-based rally. Stay tuned!