Commenting on the post-election rally and today’s trading, Gorilla Trades strategist Ken Berman said:
Q3 2020 hedge fund letters, conferences and more
A Post-Election Rally Continues
The major indices are trading significantly higher at midday as the post-election rally, led by mega-cap tech stocks, continues on Wall Street. The Nasdaq added more than 2% to yesterday’s lofty gains despite the fact that the presidential election still hasn’t been called and the risk of a lengthy legal procedure is on the rise. The Volatility Index (VIX) plunged to a more than three-week low thanks to the improving sentiment, and as small-caps have also joined the rally, the bullish signals are piling up for stocks ahead of this afternoon’s Fed announcements.
In economic news, the weekly number of new jobless missed expectations by a hair, coming in 751,000, very close to last week’s reading. Continuing claims dropped by an additional 500,000 but the measure remains above a seasonally adjusted 7 million according to the report, and the Challenger job cuts estimate was also slightly worse than the consensus estimate. Yesterday’s blowout earnings from Qualcomm (QCOM, +13.4%) gave an additional boost to the tech sector, while the better-than-expected numbers from General Motors (GM, +2.2%) have been supporting cyclical issues this morning, and contributing to the broad-based rally.
Market Wrap
Dow: 28,429, + 582 or 2.1%
S&P 500: 3,519 + 76 or 2.2%
Nasdaq: 11,880, + 289 or 1.7%
Russell 2000: 1,657, + 42 or 2.6%
Market breadth has been relatively strong this morning, with advancing issues outnumbering decliners by a 10-to-1 ratio on the NYSE at midday. Only 11 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 194 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. This morning’s rally has been broader than yesterday’s chaotic push higher, and the fact that material, industrial, and financials were very strong is great news for the broader market especially as tech stocks remain bullish too. Stay tuned!
