Investors Flock To Tech As Odds Of A Blue Wave Decline

Commenting on the decline of the odds of a blue wave and today’s trading, Gorilla Trades strategist Ken Berman said:

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Q3 2020 hedge fund letters, conferences and more

The Odds Of A "Blue Wave" Decline Significantly

The major indices are all trading significantly higher at midday following a wild election night in financial markets. While we still can’t be sure who will take the White House and the Senate, the most likely scenario is that the Democrats retain their House majority, the Republicans retain keep the Senate, and Joe Biden takes the presidency. Investors flocked into the tech sector, as the odds of a "blue wave" declined significantly, mitigating regulatory risks for the likes of Google parent Alphabet (GOOG, +6.6%), Facebook (FB, +7.5%), and Amazon (AMZN, 5.8%), which have been enjoying massive inflows this morning.

Michael Mauboussin’s 10 Attributes of Great Investors [Pt.1]

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkIn 2016, Michael J. Mauboussin completed his 30th year on Wall Street. The analyst, who was working at Credit Suisse at the time, decided to celebrate by reflecting on the ten attributes of great investors he had observed over the previous three decades. He published his ideas in a report in August 2016. I've summarised Read More

In economic news, the ISM services PMI slightly missed expectations with a reading of 56.6, which is still pointing to healthy growth in the crucial sector in the face of the resurgence of the virus. The ADP payrolls number missed expectations by a wide margin following last month’s strong reading, and with no new stimulus bill in sight, Friday’s government jobs report will be crucial ahead of the holiday season. Crude oil inventories fell by much more-than-expected this week, boosting the energy sector in the face of the pressure on the key cyclical sectors.

Market Wrap

Dow: 28,130, + 649 or 2.4%

S&P 500: 3,466 + 97 or 2.9%

Nasdaq: 11,609, + 449 or 4.0%

Russell 2000: 1,618, + 3 or 0.2%

Market breadth has been relatively weak this morning, as small-caps have been severely lagging the broader market, with the number of advancing issues roughly matching decliners’ on the NYSE at midday. 9 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 106 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. The divergence between the key sectors has been extreme in early trading, as tech, communication services, and healthcare stocks were buoyed by the likely election outcome, but cyclical issues have been showing weakness due to the uncertainty regarding the fiscal policies of the coming year. Stay tuned!