Commenting on Apple hitting a new all-time high and today’s trading so far, Gorilla Trades strategist Ken Berman said:
Q4 2020 hedge fund letters, conferences and more
Apple Hits A New All-Time High
The major indices are all trading in the red at midday following a wild morning session on Wall Street. While stocks opened higher in the face of the global weakness in risk assets, a wave of selling hit the market and the Volatility Index (VIX) spiked higher by double-digits in early trading. Apple has been leading the way higher in pre-market trading, hitting a new all-time high ahead of the firm’s earnings report which is scheduled to be released on Wednesday, but fears of overvaluation in the tech sector likely contributed to the morning dip.
Small-caps also pulled back following Friday’s surge, and the key short-term breadth indicators continue to flash red. The domestic economic calendar was empty today, but we got a negative German business sentiment indicator, which, together with the worrisome COVID headlines triggered a selloff in Europe. Semiconductor giant Xilinx (XLNX, +0.5%) will release its quarterly numbers after the closing bell, so the tech sector could see heavy trading overnight, with the highly-anticipated Big Tech earnings already in focus.
Market Wrap
Dow: 30,812, -185 or 0.6%
S&P 500: 3,830 -11 or 0.3%
Nasdaq: 13,540, - 3 or 0.03%
Russell 2000: 2,149, - 20 or 0.9%
Market breadth has been relatively weak this morning, with decliners outnumbering advancing issues by a 2-to-1 ratio on the NYSE at midday. Only 3 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 361 stocks hit new 52-week highs. The major indices have been trading below their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday selling pressure. The main cyclical sectors are all deep in the red at midday, with energy stocks, materials, and financials leading the way lower, and the relative strength of defensive issues confirms the risk-off shift as well. Stay tuned!
