Vaccine Hope Rallies the Bulls

A leaked (but not peer-reviewed) study from PFE showed they have a drug that may artificially create virus antibodies.  This certainly helped market sentiment.  Regardless, the bulls reversed overnight profit-taking and gapped markets up slightly.  The rest of the day was rollercoaster ride sideways.  At the close, the QQQ did back off of all-time high resistance but still ended at a new all-time high close.  Both of the large-cap indices fared worse, leaving high wicks.  Still, SPY closed up 0.72%, DIA down 0.20%, and QQQ up 1.17%.  The VXX fell to 32.90 and T2122 climbed to 74.60.  10-year bond yields climbed to 0.674% and Oil (WTI) rose to $39.71/barrel.  

During the day, the President told Fox News that he supports another round of direct payments to Americans.  He went on to say he even wants to give out more money than Democrats (proposed back in May), but he wants it done properly.  This reverses his “dead on arrival” statements about the Democratic plan.  The move may be a political maneuver or may signal a change in his view of virus impact.  Either way, the idea of more money in the hands of Americans can’t help but be bullish for stocks.

The main story is still the virus.  More states rolled-back reopening measures such as indoor dining/bars (CA, NY, MI).  In PA, Governor Wolf also announced an order to require the wearing of masks state-wide. OR Governor Brown ordered the same thing for her state.  However, while President Trump said “he’s all for masks” he doesn’t feel we need a national mandate and still thinks the virus will just disappear someday. 

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In the US, the numbers show we’ve now had 2,780,152 confirmed cases and 130,798 deaths.  This includes another record day nationally, with over 50,200 new cases confirmed across the country.  TX and NC were among the states that reported a record increase in cases on the day.  In CA, Governor Newsom ordered the reclosure of all indoor activities (including businesses) in the state’s 19 most-affected (and populated) counties.  At a national business level, MCD has paused their reopening for at least 21 days and AAPL closed 30 more stores (77 total now) in the hardest-hit areas.

Globally, the number of cases has reached 10,834,159 confirmed cases and 519,582 deaths.  The W.H.O. said even some countries who had success controlling the virus may well need to reinstitute lockdowns.  In Tokyo, the new outbreak continues as the city reported 100 new cases (still very manageable, but growing and they are considering reinstituting quarantine measures).  In Australia, a scandal has hit as they have now traced the source of the new Melbourne outbreak. It seems hotel staff repeated had sex with different guests while the hotel was under quarantine…which if you have to get the disease certainly isn’t the worst way to contract it.

Overnight, the PFE vaccine news buoyed markets across the globe.  In Asia, markets were strongly green (with the odd exception of Japan, which just eked out a positive close).  In Europe, the same is true, with 1% or more gains across the major bourses. As of 7:30 am, US markets are looking toward the same type of day with futures now pointing to a gap higher of between 0.50% (QQQ) to 1.08% (DIA).

The major economic news for Thursday includes Jun Avg. Hourly Earnings, Import, Exports, Trade Balance, Weekly Jobless Claims, Jun Nonfarm Payrolls, and Jun Unemployment Rate (all at 8:30 am).  There are no major earnings reports on the day.

Just in case you missed it, today is virtual Friday ahead of a 3-day weekend.  So be sure to pay yourself and lock-in some profits ahead of a long news cycle.  The bulls have been running the last 3 days and the downtrend is broken.  However, only the QQQ can technically be said to be in an uptrend.  So be careful getting too far out on the bullish limb.  As always, don’t chase, don’t predict, and don’t be greedy (take profits and move your stops as you go).  And have a safe and enjoyable long weekend.

Ed

Daily trade ideas have been moved to the trading room and the Members-Only Phone App. Trade your plan, take profits along the way, and smart. Also, don't forget to check for upcoming earnings. Finally, remember that the stocks/ETFs we mention and talk about in the trading room are not recommendations to buy or sell.

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