Stay-At-Home Space Weakness Takes A Toll On The Nasdaq

Commenting on the weakness of the stay-at-home space and today’s trading, Gorilla Trades strategist Ken Berman said:

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Q3 2020 hedge fund letters, conferences and more

The Weakness Of The Stay-At-Home Space

The major indices are mixed at midday following another active morning session on Wall Street, with investors still trying to gauge the effects of yesterday's promising vaccine news. The Nasdaq remains under severe selling pressure, due to the weakness of the "stay-at-home" space, but cyclical issues continue to shine thanks to the repositioning. Global markets have been following Wall Street's lead since Pfizer's (PFE,) announcement and especially the battered European markets are seeing strong inflows due to the improving economic outlook.

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In economic news, the JOLTS job openings estimate and the IBD/TIPP economic optimism number both missed expectations, but the job market indicator still improved compared to last month’s reading. The NFIB Small Business Index was in line with the consensus estimate despite the resurgence of the virus, which further boosted the already strong small-caps. The German ZEW Sentiment Index and the Chinese Consumer Price Index (CPI) and Producer Price Index (PPI) also missed overnight, and even though the number of infections remains very high both in the U.S. and in Europe, the virus-related optimism remains the main driver across asset classes.

Market Wrap

Dow: 29,353, + 195 or 0.6%

S&P 500: 3,547 - 4 or 0.1%

Nasdaq: 11,617, - 97 or 0.8%

Russell 2000: 1,727, + 22 or 1.3%

Market breadth has been relatively strong this morning, with advancing issues outnumbering decliners by a 7-to-3 ratio on the NYSE at midday. 9 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 60 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.t 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. Yesterday's trends continued at the level of the key sectors this morning, with cyclical issues showing relative strength, but the hard industries pulled back following yesterday's monster rally, and that could mean that a choppier period is ahead for stocks. Stay tuned!