The bears came out to play yesterday, but fear seemed to remain in check as the selling appeared to be measured and controlled.  It is very surprising with pandemic numbers on the rise and hospitalizations beginning to strain the country’s healthcare system.  Jerome Powell once again called for more stimulus to combat the economic impacts, but Mitch McConnell stated and unwillingness to negotiate and larger spending plan.  That said, the tenacious bulls are fighting back this morning with the futures pointing to a gap up open.

Asian markets closed the day seeing read across the board in reaction to rising infection rates.  European markets opened the day lower but have rallied, holding very modest gains at the time of this report.  However, here in the U.S, futures point to a 200 point Dow gap up ahead of a lighter earrings day and the pending PPI Report.  The question is, will we see follow-through buyers at the open, or might this setup a pop and drop pattern heading into the uncertainty of the weekend?

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have a lighter day of reports dominated by small-cap companies.  Notable reports include DKNG, MANU, SPB, & VIPS.

News & Technicals’

The pandemic numbers brought out the bears yesterday, but the selling appeared controlled, with the VIX rising only slightly.  Chicago issued a stay at home order begins on Monday except for essential needs.  Mitch McConnell added pressure to the market, saying he had no interest in negotiating a larger stimulus plan.  That comment came on the heals of Jerome Powell’s speech, where he said more stimulus is needed to battle the impacts of the rising pandemic numbers.  The U.S. set another new record as infection numbers jumped to over 150,000, with hospitalizations up by at least 5% in 47 states.  Treasury yields slumped yesterday in reaction to the rising numbers, with gold and silver rebounding slightly as a result. 

After reading the paragraph above, one would expect the market would be following through with the selling that began yesterday but no, the relentless bulls are fighting back this morning.  Perhaps traders are responding to the positive earnings after the bell yesterday, where DIS, AMAT, and CSCO rallied after better than expected results.  This morning’s question yet to be answered, will the gap find buyers after the open, or will we see a pop and drop heading into the uncertainty of the weekend?  Remain focused and flexible, weighing the risk you carry into the weekend carefully.

Trade Wisely,

Doug