D&D Note (12.14.2020) ~ Renewed Lockdowns Across Globe And New Virus Variant Identified In UK Stall The Reopen Trade Even As Vaccine Rollout Begins ~
Both the DOW and S&P 500 saw a flagging top chart pattern today with an early rally from the start on vaccine rollout that stalled out throughout the day as renewed lockdowns come into focus and the U.S. death toll tops 300,000.
California is already in its stay-at-home 2.0 and NYC is warning that a full lockdown could be coming soon. Various countries in Europe have also started imposing or looking at lockdowns and restrictions again.
Congress is close to approving a new Covid relief stimulus bill of $908 billion plus $6 billion in vaccine distribution. The constant delay in the bill means that millions of Americans facing unemployment benefits ending will still have to wait weeks for the extra $300 a week in benefits to kick in.
London is entering the most restrictive tier of Covid-19 restrictions after the U.K. government has identified a new variant of the virus being linked to a recent fast spread of cases in the south of the country.
Last weeks big IPO’s are coming back down to earth with Doordash falling over -9% and AirBnB falling over -6%.
Virgin Galactic fell over -16% after the company had to abort a spaceflight test due to computer issues linked to the engine.
The VIX jumped today as traders begin weighing the realistic return of aggressive restrictions being put back in place around the globe due to the rise in virus cases. This caused the reopen trade to fall and the stay-at-home trade rally.
Again, this is why a portfolio needs to be hedged right now with both sides of the 2020 trade with having exposure to cyclical stocks for an eventual reopen but also holding tech stocks while we are still not out of the woods yet in regards to the pandemic.
Markets are still near their all time highs and D&D is patiently waiting for the eventual tech selloff expected sometime in the coming 4-6 weeks.
The major indices closed near the lows of the day.
DOW down -0.62%
S&P 500 down -0.44% (3647.49)
NASDAQ up 0.50%
VIX up 5.79% to 24.66
Oil up 0.86% to $46.97 a barrel.
Gold down -0.64% to $1831.80 an ounce.
Pfizer is negotiating with the U.S. government to provide an additional 100 million Covid-19 vaccine doses according to the companies CEO.
A new survey finds that 27% of teachers are considering quitting due to Coronavirus.
Global Virus cases: 72.587 million+
Global Virus deaths: 1.617 million+
U.S. Virus cases: 16.351 million+
U.S. Virus deaths: 300,000+
~ Dave James / Principal Trader and Market Strategist