D&D Note (7.13.2020) ~ S&P 500 Briefly Goes Positive On Year Then Dramatically Reverses Down on South China Sea And California Re-Shutdown ~
Stocks gapped up to start the day and rallied into the session but then news hit the wires. The S&P 500 had briefly gone positive for the year at intraday high of 3235.32 then the double news hit of South China Sea and California.
Headlines from the Trump administration came out the U.S. rejects nearly all of Beijing’s maritime claims in the South China Sea. Pompeo calls China’s claims over the waterway as illegal.
Many people have worried for years that tensions in the South China Sea could spark a war between China and the U.S.
China in retaliation over Xinjiang has place sanctions on Republican Senators Marco Rubio and Ted Cruz.
At the same time news also broke that California is now re-shutting down statewide indoor dining, movie theaters, and bars due to rising Covid-19 cases.
These two pieces of news caused the entire market to dramatically reverse in the afternoon.
The NASDAQ had been up 2% on the day and then fell to -2% down. This was the biggest peak to trough intraday reversal since March 20th.
The VIX inversely rallied in the afternoon session surging 17%.
Highlighting the crazy price action today was Tesla which gapped up to open to rally 16% the reversed and closed down -4.8%. There was a 4 hour period today on Robinhood in which Tesla stock was added to almost 40,000 accounts. That means there are now 447,000 Robinhood traders that own Tesla shares.
The consensus analyst price target for Tesla is $777 a share.
We are simply in a giant global liquidity bubble. Eventually it is going to pop.
DOW up 0.04%
S&P 500 down -0.94% (3155.22)
NASDAQ down -2.13%
VIX up 17.96% to 32.19
Oil down -2.32% to $39.61 a barrel.
Gold up 0.14% to $1804.60 an ounce.
The Los Angeles school district (the 2nd largest in the country) along with San Diego school district announced schools will go remote only this fall.
NYC sees its first day without a Covid-19 death for the first time since the pandemic begun taking lives in the city.
Global Virus cases: 13.04 million+
Global Virus deaths: 571,685+
U.S. Virus cases: 3.36 million+
U.S. Virus deaths: 135,524+
~ Dave James / Principal Trader and Market Strategist
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