Activity is slowing down and continuation patterns proliferate. NDX is more bullish than SPX. SPX sectors are sideways to mild correction except XLK, XLY +/- XLV. It’s time to let 2020 be – sans a new disaster. Enjoy the season and come back to it in 2021.
Momentum declined last week and with net bullish sentiment is not a great setup for further gains short term. The indexes are overbought but not excessively so and appear to be internally correcting. The peak may have coincided with the two IPO’s this week that were extreme. Next market movers: momentum + pandemic + earnings.
Last week was very bullish for stocks. We are reaching the tops of technical ranges but have not yet established extreme overbought conditions, which as we all know can last for long periods especially in raging momentum markets like what we have now. If “raging” was a stock it would be ripe for a correction.
Although it is difficult to make very strong conclusions on a holiday week the market remains very bullish and became more so last week. The healthcare sector has been mildly correcting for a while and underperforming the broader market. Technicals suggest this may change soon. Stay tuned.
We are still mostly in a momentum market and disconnected from actual occurrences. There are a couple very strong market price support mechanisms in play likely limiting downside: Fed policies and progress on vaccines. Whether we rocket higher or not seems not that likely to me, but if the progress on vaccines accelerates, it could happen. Maybe that would give better visibility and an upward bias to healthcare.
The market is bullish by just about any parameter you can put up. This, of course, in the teeth of the new surge in Covid-19 of uncertain impact but not expected to be good. It seems to me we have somewhere between 2 and 6 months before we start seeing real positive impact on the virus by whatever means. And longer for measurable vaccine impact. The markets may or may not care.
We have some vaccine news and we have positive seasonal expectations. We continue to follow the Age of Covid market story. This is driven by companies that are doing well + vaccine and treatments for Covid available sometime in the future + Fed’s monetary policy +/- Congress doing something…anything.
This past week provided a reality check on the resurgence of the SARS-CoV-2 pandemic. While the broad measure of the healthcare market (XLV) underperforms the broader market (SPY), great anticipation exists for the development and distribution of effective vaccines. What that means for the people who receive them and the companies that produce them remains to be seen.
The overall markets this past week despite the headlines signaled some bullish messages beneath the headlines. And yet we have virus surge again. We look for continuation of some of these into longer trends as we traverse the recovery though clearly we have a challenging time ahead of us this fall into winter with the virus. Supplies and equipment are already market-recognized to help meet the challenge…
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