Quick Take: Buy Bias. Fed fueled buying ignores weak business and economic data.
FOR THE WEEK
For all the reasons to sell amidst this coronavirus infected economy, the market just doesn’t.
The market will continue to drift higher until it doesn’t.
|INDEX||CLOSE||CHANGE||% CHANGE||YTD %|
Money shifted into value oriented Industrials, Materials and Healthcare this week as the tech gorillas cooled with a pullback.
Watch for growth stocks as a group to cool off as funds take profits from a legendary rally. Though opportunities still abound for new breakouts.
Big dividend payers remain a thing. Watch how the Dow doesn’t sell off as hard as the S&P 500 and Nasdaq on down days. Treasuries won’t yield much as the government promises to keep rates low for a couple of years.
Optimism is growing on the covid-19 vaccine front as a collaboration with Pfizer (PFE, +1.15%) and BioNTech (BNTX, +11.21%) received fast-track designation from the FDA.
Moderna’s (MRNA, +51.49) had reported a positive first phase in its study. Novavax (NVAX, +48.89%) also continues to receive votes of hope as its stock teared higher for another week.
The market’s V recovery continues to be supported by economic data.
The trend in job recovery continues, though about a third of the jobs lost during the virus lockdown have been recovered, according to US employment data released Thursday.
As the band plays upbeat, a darker reality threatens with the coronavirus.
States making up nearly a third of the US economy reported a fearsome uptick in covid-19 cases. California, Texas, Florida and Arizona are taking measures to counter the spread.
There’s no guidebook for this. We simply don’t know what to expect as the pandemic plays out.
No one expects year over year earnings for the second quarter to be good. The attention will go to guidance, as usual.
Analysts may have predicted the worst for companies struggling during lockdown, look for surprises, and more importantly the reactions to those surprises.
Big banks reporting earnings largely beat estimates as a group. But uncertainty in the market has led them to reserving more cash for failed loans.
News reactions were a mixed bag for the six largest banks reporting: Citigroup (C, -4.62%), JPMorgan (JPM, +1.96%), Wells Fargo (WFC, -2.04%), Goldman Sachs (GS, +2.85%), Bank of America (BAC, -3.33%) and Morgan Stanley (MS, +5.24%.)
Lack of participation in this bull market from the financials does not bode well for business. Price action on the Financial sector ETF (XLF, +2.09%) is not supporting a rosy future as it continues to struggle with mostly sideways chop.
Tech leadership tests its bullish form with sizable drops. Let’s call it profit taking after huge runs since March.
Facebook (FB, -1.24%), Apple (AAPL, .42%) Amazon (AMZN, -7.44%), Netflix (NFLX, -10.16%) Google (GOOG, -1.7%) Microsoft (MSFT, -5.05%)
Netflix (NFLX) shares fell 10%, with a bulk of those losses coming after the company issued cautious subscriber guidance at the end of the week.
Gold (GLD, +0.55%) and Biotech (IBB, +3.41) have their breakouts intact. These have been the drivers in the Materials and Healthcare sectors.
- The S&P 500 is poised for another breakout as it trends above its major moving averages, just 5% from its 52-week high.
- NYSE volume was 7% lower than last week as edged out sellers with a 1.2 ratio.
- Nasdaq volume was 10% higher as buyers prevailed with a 1.7 ratio.
|TICKER||INDUSTRY ETF||% CHG|
|XLI||Industrial Sector Fund||5.87|
|XLB||Materials Sector Fund||5.47|
|XLV||Health Care Sector Fund||5.14|
|XLU||Utilities Sector Fund||4.22|
|XLE||Energy Sector Fund||3.24|
|XLP||Consumer Staples Sector Fund||2.16|
|XLF||Financial Sector Fund||2.09|
|XLY||Consumer Discretionary Sector Fund||0.4|
|XLRE||Real Estate Sector Fund||0.06|
|XLC||Communication Services Sector Fund||-0.5|
|XLK||Technology Sector Fund||-1.16|
Buyer’s Bias intact. Opportunities abound.
|AEYE||AudioEye, Inc.||Internet Software/Services|
|ALNY||Alnylam Pharmaceuticals, Inc||Biotechnology|
|CHGG||Chegg, Inc.||Miscellaneous Commercial Services|
|CRSP||CRISPR Therapeutics AG||Biotechnology|
|CRWD||CrowdStrike Holdings, Inc. Class A||Packaged Software|
|PAAS||Pan American Silver Corp.||Precious Metals|
|RARE||Ultragenyx Pharmaceutical, Inc.||Biotechnology|
|RMBL||RumbleOn, Inc. Class B||Information Technology Services|
|SEDG||SolarEdge Technologies, Inc.||Electrical Products|
|TNDM||Tandem Diabetes Care, Inc.||Medical Specialties|
|TTD||Trade Desk, Inc. Class A||Advertising/Marketing Services|
|WRTC||Wrap Technologies, Inc.||Industrial Conglomerates|
|ZM||Zoom Video Communications, Inc. Class A||Packaged Software|
|ALBO||Albireo Pharma, Inc.||Pharmaceuticals: Other|
|AXNX||Axonics Modulation Technologies, Inc.||Medical Specialties|
|DRNA||Dicerna Pharmaceuticals, Inc.||Biotechnology|
|EXAS||Exact Sciences Corporation||Biotechnology|
|OCUL||Ocular Therapeutix Inc||Pharmaceuticals: Major|
|OR||Osisko Gold Royalties Ltd||Precious Metals|
|OTRK||Ontrak, Inc.||Medical/Nursing Services|
|STNE||StoneCo Ltd. Class A||Packaged Software|
|XLRN||Acceleron Pharma Inc||Biotechnology|
|Z||Zillow Group, Inc. Class C||Information Technology Services|
Control your loses, let your winners run.