Global Risk Assets Underpressure Due To COVID Infections

Commenting on the new record number of COVID infections and today’s trading Gorilla Trades strategist Ken Berman said:

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Q2 2020 hedge fund letters, conferences and more

The New Record Number Of COVID Infections

The major indices are all trading considerably higher at midday following a very strong overnight session for domestic socks. Global risk assets remain under pressure due to the new record number of COVID infections, and as the total number of cases getting close to 30 million, more and more countries are announcing stricter travel restrictions and other containment measures. Thanks to the positive vaccine-related news flow over the weekend and the promising U.S. numbers. The hardest-hit U.S. industries have been showing strength this morning but most cyclical sectors failed to join the party.

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The U.S. economic calendar was empty today, but the slightly better-than-expected Eurozone industrial production supported stocks in pre-market trading. The OPEC cut its demand forecast for the crude oil market for the next 13 months, and while the commodity already took a beating last week, the report triggered another wave of selling in the face of the strength in equities. From a technical perspective, the large-cap benchmarks, are trading at very important levels, near their 50-day moving averages, so the afternoon session and the coming days could see heavy trading, as bulls and bears are expected to fight for control.

Market Wrap

Dow: 28,046, + 381 or 1.4%

S&P 500: 3,397, +56 or 1.7%

Nasdaq: 11,100, + 247 or 2.3%

Russell 2000: 1,524, + 27 or 1.8%

COVID infections and market returns

Market breadth has been in line with the performance of the major indices this morning, with advancing issues outnumbering decliners by a 4-to-1 ratio on the NYSE at midday. Only 14 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 53 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. Apart from the energy sector, stocks are trading in the green across the board, with tech and real estate stocks being the strongest, but consumer-related issues and industrials are relatively weak warrants caution following last week’s volatile pullback. Stay tuned!