Commenting on brokages lifting trading bans from GameStop and AMC, and today’s trading so far, Gorilla Trades strategist Ken Berman said:
Q4 2020 hedge fund letters, conferences and more
Brokerages Lifted Their Trading Bans From GameStop And AMC
The major indices are all trading significantly lower at midday following a bearish overnight session and another very active morning on Wall Street. Wild trading continues among the most-shorted issues and GameStop (GME, +75%) and AMC (AMC, +61%), in particular, and the short squeeze resumed this morning after most brokerages lifted their trading bans. Stocks are on track for their worst week since October, but the fact that Treasury yields are up for the second day in a row, and the dollar is showing weakness as well, gives hope to bulls that the pullback could soon be over.
We got a promising batch of economic releases this morning, with personal spending, personal income, pending home sales, the Core PCE Price Index, and the Chicago PMI all beating the consensus estimates. The manufacturing measure was especially strong, hitting its highest level in two years, while the personal spending data gave a small boost to consumer-related stocks following yesterday's weakness in the sector. The German and French GDP prints also provided much-needed support for risk assets overnight, but bears remained in control across the globe amid the mixed COVID-related headlines.
Market Wrap
Dow: 30,150, - 453 or 1.5%
S&P 500: 3,733 - 54 or 1.4%
Nasdaq: 13,145, - 192 or 1.4%
Russell 2000: 2,112 + 6 or 0.3%
Market breadth has been relatively strong this morning, with advancing issues outnumbering decliners by a less than 5-to-4 ratio on the NYSE at midday. Only 3 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 51 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 sectors have been clearly in "risk-off" mode in early trading, with only the defensive utilities and healthcare sectors gaining ground and since tech stocks and cyclicals have been showing relative weakness, a major reversal seems unlikely this afternoon. Stay tuned!
