Markets opened relatively flat on New Year’s Eve. However, after some normal volatility, the bulls won out. All 3 major indices closed at new all-time high Closes (but not above prior intraday highs). The large-caps both printed “Morning Star type” candle patterns and the QQQ printed a Bullish Harami (of the Spinning Top variety). On the day, the DIA gained 0.55%, the SPY gained 0.51%, and the QQQ gained 0.25%. VXX was flat at 16.79 and T2122 (4-week New High/Low Ratio) inched up just outside of the overbought territory at 79.59. 10-year bond yields were flat at 0.916% and Oil (WTI) was also flat at $48.42/barrel.
In business news over the long weekend, TSLA reported they just missed its goal of shipping 500,000 cars in 2020, coming up just 450 cars short of the milestone. Bitcoin also rallied above $34,000 for the first time. And the NYSE delisted 3 Chinese telecom companies as required by President Trumps November executive order. China vowed some unspecified retaliation on Saturday. In early Monday news, 226 GOOG employees have formed a union after ongoing disputes with management.
On the political front, the new Congress was sworn in. The Senate also completed the process by voting to override the President's veto of the $740 billion Defense Spending bill (now law). The same leadership was re-elected on either side of the aisle in both Houses, while the President continues to pressure and plot ways to overthrown his election defeat. This runs against the backdrop of the GA Senate runoff elections that are likely to leave the Republicans in control of the Senate but are very close races according to most pundits. No legislative agenda (such as a vote on raising stimulus payments to $2,000) is likely to take place until after those results.
Related to the virus itself, US infections continue to rage as the US. The totals have risen to 21,113,528 confirmed cases and 360,078 deaths. The post-holiday surge is still not fully upon us. However, the 7-day daily average remains high at 216,886 new cases and 2,696 deaths per day. Three more states have identified cases of the new strain of COVID-19 over the weekend. Most experts have been saying they believe the new strain is already everywhere. On Sunday, the federal government said it is in talks with the FDA to possibly speed up the rate of vaccinations by giving half doses of the MRNA vaccine to twice as many people.
Globally, the numbers rose to 85,579,769 confirmed cases and the confirmed deaths are now at 1,852,389 deaths. As a reference, the world is averaging about 613,548 new cases and 11,066 new deaths per day. The new strain first seen in the UK has now been found in 37 countries as well as Hong Kong and Taiwan. Parts of Japan are going back into lockdown. There is also now a different mutation out of South Africa. Oxford scientists say this strain has substantial changes in the structure of the virus and is therefore concerning related to current vaccine effectiveness. British Health Minister Hancock said it is too early to tell, but he is incredibly worried about the new variant. In an interesting story, Bloomberg says France is approaching vaccinations in a very cautious way, having only completed 500 of the first round of shots to date, despite starting the same day as all other European countries.
Overnight, Asian markets were mostly green. Malaysia (-1.51%) and Japan (-0.68%) were outliers. However, South Korea (+2.47%), Shenzhen (+2.45%), and Australia (+1.47%) led the rest of the Asian exchanges higher. This came despite Chinese Dec. Mfg. PMI data coming in below expectations. In Europe, markets are solidly green across the board so far on Monday. Among the big 3 bourses, FTSE (+2.59%) leads the way with the CAC (+1.52%) and DAX (+1.08%) more typical across the continent. As of 7:30 am, US Futures are pointing to a moderate gap higher at the open. The DIA is implying a +0.47% gap, the SPY a +0.43% gap, and the QQQ a 0.41% gap higher.
The major economic news for Monday is limited to Dec. Mfg. PMI (9:45 am) and a Fed speaker (Bostic at 10 am). There are no major earnings reports on the day.
The bulls seem to want to start off the new year on a small gap higher. With much of the big money expected to return to the office today, we may see some optimism coming off their vacation. For whatever reason, Bitcoin has taken a major Monday hit (down 10%) after having reached all-time highs.
Focus on the chart and your trading process. Lock in those base hit profits and maintain your discipline. Follow the trend, respect support and resistance, and don’t chase moves you have missed. Remember that trading is a marathon, not a sprint. So, don’t try to get rich quick. Do it in the long-run by hitting goals over and over again.
Swing Trade Ideas for your consideration and watchlist: COMM, TFC, TXN, SWCH, JNPR, HON, ORBC, AVTR, WFC. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
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