Brexit Deadline Extended, The Dow And The Russell 2000 Soar

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Commenting on the extension of the Brexit deadline and today’s trading, Gorilla Trades strategist Ken Berman said:

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The Brexit Deadline Extended

The major indices are all trading higher at midday following a strong pre-market rally in cyclical issues and small-caps. The Dow and the Russell 2000 scored new all-time highs in early trading thanks to the positive vaccine-related developments and the extension of the Brexit deadline which makes a badly-needed deal possible in the coming days. Pfizer's vaccine is already being distributed in the U.S., following in the footsteps of the U.K., and with the number of new cases still being very high, the ahead-of-schedule rollout could be crucial to deal with the current wave of outbreaks. 

Bulls are trying to recover from last week’s pullback in stocks,
and the first days of the week will be crucial in deciding the short-term direction on Wall Street. While the domestic economic calendar was empty this morning, the better-than-expected Eurozone industrial production added to the bullish overnight pressures. Despite the positive headlines, risk assets are off their session highs and the price of oil, which has been a leading indicator for other asset classes, suffered a hit this morning on the reports of Germany's strict holiday lockdown measures.

Market Wrap

Dow: 30,092, + 46 or 0.2%

S&P 500: 3,675 + 11 or 0.3%

Nasdaq: 12, 511, + 133 or 1.1%

Russell 2000: 1,933, + 21 or 1.1%

Market breadth has been relatively strong this morning, with advancing issues outnumbering decliners by a more than 3-to-2 ratio on the NYSE at midday. Only 3 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 254 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. Tech stocks, the healthcare sector, and utilities are in the best position at midday following a sharp intraday reversal in the key cyclical sectors, and that warrants caution for bulls this afternoon. Stay tuned!