[Chart courtesy of MarketWatch.com]

1. Moving the markets

The futures market already indicated that volatility was on its way, with the indexes slipping around 1%, then trimming their losses and vacillating around their respective unchanged lines.

Moving into the regular session, the Dow and S&P 500 never saw the light of day and stumbled around in negative territory, then losing footing fast as selling accelerated late in the day before rebounding into the close. The Nasdaq fared much better and held onto gains till about mid-day, after which the bearish forces proved too strong, and the index capitulated as well.

The bearer of bad news was reports showing increasing numbers of U.S. coronavirus cases, which brought concerns back to the front burner that the nascent economic recovery may not be as solid as assumed, especially in view of recent new lockdown orders. As a result, the S&P barely remains above Friday’s closing level, which means much of the “vaccine rally” has been given back.

Further sapping bullish strength were Fed head Powell’s remarks that the economic outlook remained uncertain despite the positive vaccine news story.  

“From our standpoint, it’s just too soon to assess with any confidence the implications of the news for the path of the economy, especially in the near term,” Powell said regarding the vaccine. “With the virus spreading, the next few months could be challenging.”

Also keeping the bulls in check were WH statements, which greatly diminished the chances of a trillion-dollar or more stimulus for the economy before January, but Dems and Reps are still talking.

Moving into bullish mode was gold, which managed to stage a modest rally thereby offsetting most of the equity losses.  

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[Chart courtesy of MarketWatch.com]

1. Moving the markets

In the futures markets, we saw stocks in rally mode, including the Nasdaq staging a comeback. The US dollar inched higher, thereby keeping a lid on gold’s attempts to rebound.

The tug-of-war between surging infections and prospects for a new effective Covid-19 vaccine had the latter coming out ahead by lending support to equities, which carried over into the regular session.

After taking a beating over the last few trading days, dip buyers stepped in and pushed the Nasdaq up over 2%, with the S&P 500 placing a distant second place, while the Dow slipped slightly into the red after strong back-to-back sessions.

The bond market was closed due to Veteran’s Day, which prompted a reversal from value back to growth, as small caps suffered but were able to climb back to the unchanged line. As the Nasdaq recovered, so the did the FANG stocks, as Bloomberg shows in this chart.

Cycling back to the Coronavirus, Bloomberg’s latest update shows that, while confirmed cases are rising, the hospitalization rate is vacillating but not storming higher, and the confirmed deaths have not increased:

You can draw your own conclusions.

Continue reading…

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can read it here again.

It features some of the 10 broadly diversified domestic and sector ETFs from my HighVolume list as posted every Saturday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.

The below table simply demonstrates the magnitude with which these ETFs are fluctuating above or below their respective individual trend lines (%+/-M/A). A break below, represented by a negative number, shows weakness, while a break above, represented by a positive percentage, shows strength.

For hundreds of ETF choices, be sure to reference Thursday’s StatSheet.

For this current domestic “Buy” cycle, here’s how some our candidates have fared:

Click image to enlarge

Again, the %+/-M/A column above shows the position of the various ETFs in relation to their respective long-term trend lines, while the trailing sell stops are being tracked in the “Off High” column. The “Action” column will signal a “Sell” once the -8% point has been taken out in the “Off High” column. For more volatile sector ETFs, the trigger point is -10%.

3. Trend Tracking Indexes (TTIs)

Our TTIs barely changed as big tech dominated today’s session.

This is how we closed 11/11/2020:

Domestic TTI: +16.80% above its M/A (prior close +17.01%)—Buy signal effective 07/22/2020

International TTI: +14.28% above its M/A (prior close +14.06%)—Buy signal effective 07/22/2020

Disclosure: I am obliged to inform you that I, as well as my advisory clients, own some of the ETFs listed in the above table. Furthermore, they do not represent a specific investment recommendation for you, they merely show which ETFs from the universe I track are falling within the specified guidelines.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

The global rally fizzled out with only one of the major indexes making some headway, namely the Dow, as the S&P 500 slipped slightly into the red, while the Nasdaq sell-off continued, albeit at a lesser pace leaving the index down -1.37% for the day.

Pfizer’s vaccine stock fest hit some reality today with skepticism emerging as to the true efficacy of this vaccine and the ability to deliver it within a reasonable time frame.

The sector rotation persisted out of high-tech and into the Russell 2000 with small-caps and cyclicals anticipated to be the main beneficiaries of an economy recovering from the pandemic. Of course, this is only wishful thinking right now, as the pendulum could quickly swing back the other way.

“The ‘stay at home’ trade, which has led the market higher for most of this year, may be falling out of favor,” said Lindsey Bell, chief investment strategist at Ally Invest. “There’s still a good long-term case for tech, but it may not outpace the rest of the market like it has since March.”

In the meantime, the election uncertainties go on, despite some of the media already having decided who won. The fact is, however, they are not the decisionmaker, so we’ll have to wait and see until this challenge get legally resolved.

Gold managed to bounce back as the US dollar went sideways, while bond yields again spiked with the 10-year closing within striking distance of the 1% level.

In my view, gold remains a “safe haven” in an environment where politically and monetarily things could turn on a dime.

Analyst Peter Schiff had a similar view of gold’s role:

“It’s a safe haven from the monetary and fiscal policy mistakes that were made in reaction to COVID. That’s why gold was going up [during the pandemic]. And it’s because the government is going to continue to make the same monetary policy and fiscal policy mistakes after COVID, that’s why gold is going to keep going up. And in fact, because of all the money they printed before COVID, because of all the extra debt that we accumulated during COVID, that’s why the Fed can’t dial it back. That’s why if the economy recovers from COVID, it can never recover from the addiction to stimulus. That’s why the stimulus has to continue long after the disease it was meant to cure goes away. That means inflation is going to run out of control.”

For sure, until this election is decided, the days and weeks ahead will be anything but boring.

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[Chart courtesy of MarketWatch.com]

1. Moving the markets

If you were looking for wild and whacky market behavior, look no further, you found it today. Not only were futures up across the board, including gold, and led by the technology sector, things reversed once the regular session opened.

With the Dow being up some 1,500 points, and losing almost half of it by day’s end, the overnight leader, the Nasdaq, hit the skids and ended down some -1.5%. Despite a dive into the close, the Dow and S&P 500 managed to hang on to now sharply reduced gains.

You could almost think about it as “opposite” day. Consider that some sectors (not tech) rallied in the face of sharply rising bond yields with the 10-year (not shown) now in striking distance of the 1% level. The 20-year bond ETF TLT dropped -2.23% and looked like a penny stock.

The US dollar index rallied sharply thereby pulling the rug out from gold’s recent gains and sending the precious metal back below the $1,900 level.

Causing the relentless surge in equities, in the face of rising bond yields, were indications by drug makers Pfizer and BioNTech that their Covid-19 vaccine is more than 90% effective.

Added CNBC:

The 90% effective rate from Pfizer and Germany’s BioNTech was better than what the market was expecting. Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, has said that a vaccine that was 50% to 60% effective would be acceptable.

Of course, hope suddenly reigns supreme about getting the old life back, at some point in the future, returning to normal, people going back outside, the economy reopening, and masks being ditched.

Who knows what the reality will look like and if the above drug maker announcements really have merit?

Technically speaking, it will now be interesting to see what happens to the S&P 500, which has reached the top end of its wide megaphone pattern, as Bloomberg demonstrates in this chart. Breakout or retracement, that is the big question.  

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