Commenting on the strength of the stay-at-home stocks and today’s trading, Gorilla Trades strategist Ken Berman said:
Q3 2020 hedge fund letters, conferences and more
The Strength Of The Stay-At-Home Stocks
The major indices are mixed and flat at midday following a cautious start to the week on Wall Street amid the continued surge in the number of COVID cases in the U.S. Cyclical issues pulled back in early trading but the Nasdaq added to its gains from Friday, hitting yet another all-time thanks to the relative strength of the key "stay-at-home" stocks. Trading activity has been relatively light this morning as investors took a step back ahead of a crucial week of stimulus talks in Washington, with all eyes on the details of the bipartisan $900 billion proposal.
On a positive note in the fight against the virus, the U.K. is set to start its emergency vaccination program tomorrow following last week’s approval of Pfizer's (PFE, +0.6%) candidate serum. The domestic economic calendar has been empty today, and even though the Chinese trade balance and German industrial production both beat expectations, risk assets remained under pressure across the globe. Last week’s weaker-than-expected non-farm payrolls number continues to weigh on consumer-related issues too, but a stimulus deal could give a boost to the sector in the coming weeks.
Market Wrap
Dow: 30,092, -126 or 0.4%
S&P 500: 3,695 - 4 or 0.1%
Nasdaq: 12,520, + 56 or 0.5%
Russell 2000: 1,895, + 3 or 0.1%
Market breadth has been relatively weak this morning, with decliners outnumbering advancing issues by a more than 3-to-2 ratio on the NYSE at midday. Only 2 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 220 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. Tech stocks, communication services, and the key defensive sectors have been very strong this morning due to the pause in the vaccine rally, but apart from the energy sector, which continues to be the most volatile, cyclicals are only slightly in the red, which is a positive sign for bulls. Stay tuned!
