We have been through a lot. As positive news spreads in regards to soon being better able medically to both treat and prevent Covid-19, the SARS-Cov-2 virus spreads apparently more quickly across the nation than it ever has before. Today is a holiday. Markets will trade normally. Banks will not open. The roads, for those who must commute this day, will move more freely. Another day. Another special day. The seconds, minutes, and then the hours though will pass in silence.
You will hear no bugle from afar. What's that? Just the Tinnitus that has been there since you were 17. There will be no parades down the many Main Streets across this great land. Great land? A thousand times over, yes it is. There will be no gathering at the town's monuments to heroes both contemporary and gone long ago. Today is Wednesday. Today is the eleventh day of the eleventh month of calendar year 2020. The high school band will not march on playing a medley of patriotic tunes that force some of us to snap to attention, while... making the heart beat just a little faster. The town will seem no more lively than it has since the old normal ended way back in March.
That flag, you know... the one that's still there, will still fly, at the school, at town hall, and in many of our driveways. Still there. Let that sink in. Don't ever forget it. Always still there. Waving in silence to all who "know". Waving in recognition to all who can "see". Whose broad stripes and bright stars we still hail through a different kind of twilight. Always on duty. Hope in the face of despair. Always in defense of all that is good and seeking what is ideal in this world. No need to mention, because you already knew... our flag is still there. Our flag is the sentinel.
Two, No Three
Just how many markets are there? We used to say "the market" was up or down by so many points. Decades ago, "the market" referred to the Dow Jones Industrial Average. For the past 25 years or so, "the market" became the S&P 500. Now, in order to explain to someone what "the market" did on any single day, one must have a broad knowledge of currency, commodity, credit and equity markets just to start to tell the story. In addition, the listener must truly have an interest, or they will be lost at the start. Have you heard the way your local (and even sometimes at the national level) news stations try to explain what happened on "Wall Street" on any given day. What becomes immediately apparent is that either these news types are either incredibly ignorant on the subject... or they assume that you are. No way to put that nicely.
On Tuesday, Notes and Bonds of longer dated maturities continued to show weakness, forcing an expansion in short-term/long-term yield spreads. The U.S. dollar found support and at least started to rally against a basket of fellow reserve currencies. This allowed Gold, and Silver, to stabilize while hopes for an economic renewal allowed for crude and copper to hang onto recent gains. This renewal of hope, born of an electoral divide that should prevent higher rates of taxation has impacted equities as well. However, equity markets have fractured into two, three, even more groupings as Pfizer (PFE) and Eli Lilly (LLY) have both released good news in recent days with more expected soon from the likes of Moderna (MRNA) and others. Oh, on that note... listen up Governors... we don't care which administration gets credit for a vaccine, just protect your people. Should not have to be told that this is not political. Want to brag about being a kid from Queens? The working class borough? Act like it.
The first thing I looked for on Tuesday was the Nasdaq gap fill. That was a cinch. Take a look...
Gap number one has now been filled. Gap number two straddles the 50 day SMA at 11,304. Does this gap need to also fill? There are no sure things in this sport, nor in any other sport by the way, but usually... yes. Most gaps fill. Equity index futures are trading higher this morning, and we already know that trading volumes will be light relative to the past week and change. It may not happen today, but I think that the Nasdaq Composite probably has to test at least that 50 day line. The Nasdaq 100 (sans financials) already has tested that line...
...to find precise support there, but like its larger cousin has left a gap around that blue line. The Nasdaq 100 will be for the Nasdaq Composite, the proverbial "canary in a coal mine."
We know that Tuesday was another lousy day for these two indices. Tuesday wound up as another very good day for The Dow Industrials, Dow Transports, Mid-Caps and Small-Caps. The broadest large cap index of them all... the S&P 500 closed out the session essentially unchanged at the headline level as Energy once again led the way, and Technology obviously played the role of anchor, weighed upon most heavily by software and still the semiconductors though I think I look to that group to start acting more like commodities and less like tech stocks should the economy actually shift into a higher gear. Should.
Trading volume fell sharply at both of our primary exchanges, though remained at levels that any observer would see as elevated. Winners beat losers decisively at both exchanges as well. Bet you did not expect that, though losers did attract more volume among Nasdaq names despite being outnumbered.
It is with great concern that I noticed on Tuesday that Covid-19 hospitalizations in the U.S. reached a record high on Tuesday. This is troubling as the current epicenters are multiple and many are in areas that might have less capacity to handle a public health crisis. How do they even recruit from afar, as New York did last spring, if the virus is expected to keep spreading nationally unchecked at least for now? This I don't know. We may be "rounding the corner" medically, but until we do, people keep getting sick, some die, and some just do not recover well for a very long time. This will be an economic problem as much as an issue of health. Do not let your guard down. Do not become fatigued. Far greater people have suffered far worse for much longer. We can be smart about this. We will.
On that note, I read in The Financial Times last night that hedge fund manager Bill Ackman is again betting that markets have become "complacent", and businesses will struggle to service their debt. Should there end up being large regional shut-downs, he'll be right. Again. Remember that last spring, Ackman had also positioned similarly, and profited hugely. Let's just hope he is not booked at CNBC anytime soon. That interview is one that I will never forget. Terrifying.
Expectations are rising that Boeing (BA) could see the grounded 737 MAX passenger jet recertified to fly commercially very soon. Maybe even next week after an internal email sent by FAA Director Steve Dickson made the rounds this week.
There are two forces at work here that concern me, as I am long this name. On the positive side, BA has taken the 50 day SMA as well as the 200 day SMA in a matter of days, despite the two being nearly $20 apart. Finding support at such high profile technical levels often forces portfolio managers to jump on board. Just look at the volume over the past three days.
That said, we still have this gigantic, unfilled gap staring us right in the face. My plan? My position size is slightly on the large side. I am already up 24% in the name, so I can risk some wiggle room here. I am thinking that I can get paid $215 for the stock if travel ever resumes. Fill the gap? If so, I will add, probably increasing position size by between 25% to 33%, depending on how brave I feel at the time.
Economics (All Times Eastern)
No domestic macroeconomic data-points scheduled for release due to Federal holiday.
The Fed (All Times Eastern)
No public appearances scheduled due to Federal holiday.
Today's Earnings Highlights (Consensus EPS Expectations)
After the Close: (GTBIF) (.00)