Solid gains for stocks as investors cheer FDA approval of Pfizer Covid vaccination

S&P and NASDAQ close at record levels

The US major indices had a solid gains today led by the NASDAQ index which increased 1.54%. The Russell 2000 also had a solid gain of near 1.9%.

The gains were help by the FDA’s full approval of the Pfizer Covid vaccination. The hope is that those who have remained unvaccinated will be encouraged to get vaccinated now, and also that businesses and local governments, etc. will start to force workers to get the approved Pfizer vaccination.
  • NASDAQ closed at a record high
  • the S&P and NASDAQ hit new all-time intraday record levels. The S&P could not stay above its previous record closing level.
  • Dow is up for the second straight day
  • NASDAQ and S&P client for the third straight day
the final numbers are showing:
  • Dow up 215 points or 0.61% at 35335.71
  • S&P index up 37.84 points or 0.85% at 4479.51
  • NASDAQ index up 228 points or 1.55% at 14942.65
  • Russell 2000 up 40.70 points or 1.88% at 2208.30

Major European indices end the day with mixed results.

A good week for European equities as they benefit from flow of funds

The major European indices are ending the week with mixed results.  The German Dax broke its four day streak that also saw new all time highs being made.
The provisional closes are showing:
  • German DAX, -0.5%
  • France’s CAC, +0.2%
  • UK’s FTSE 100, +0.4%
  • Spain’s Ibex, +0.45%
  • Italy’s FTSE MIB, unchanged
For the week, the major indices are all solidly higher:
  • German Dax, +4.18%
  • France’s CAC, +4.5%
  • UK’s FTSE 100, +1.9%
  • Spain’s Ibex, +4.1%
  • Italy’s 4.9%

Year to date, all the indices are also higher:

  • German Dax, +5.71%
  • France’s CAC, +8.87%
  • UK’s FTSE 100, +4.62%
  • Spain’s Ibex, +6.9%
  • Italy’s footsie MIB, +8.4%
In the European debt market, the benchmark 10 year yields are ending the day higher across the board

European yields are higher across the board
In the forex, the snapshot of the strongest weakest as London/European traders look to exit shows the CAD is extending its lead to the upside after a trauma than expected jobs report today. The NZD and GBP remain the weakest. The USD is stronger but losing ground vs the CAD.

US Indices close the day with modest gains in down and up session.

Major indices rebounds off the lows into the close

The major indices opened modestly higher, moved lower into the midday, and rallied back higher into the close before finding some selling at the bell.   The Nasdaq led the way higher with a gain of 0.28%. The Dow was not far behind with a gain of 0.19%
The final numbers are showing:
  • S&P index rose 1.58 points or 0.04% at 3801.19. The high price reached 3810.78. The low price extended to 3776.51
  • NASDAQ index rose 36 points or 0.28% at 13072.43.  The high price reached 13105.03. The low extended to 12963.91
  • Dow closed up 60 points or 0.19% at 31068.69.  The high price reached 31114.56. The low extended to 30888.76
  • The Russell 2000 mid-cap stocks also close higher with solid gain of 1.63%. The index closed at its highs for the day.

Some of the bigger winners today included:

  • Doordash, +14.96%
  • AirBNB, +8.55%
  • Chewy, +7.3%
  • Uber, +7.25%
  • Corsair, +7.09%
  • General Motors, +6.24%
  • Zoom, +5.65%
  • Ford, +5.11%
  • Lyft, +4.78%
  • Tesla, +4.73%
  • Schlumberger, +4.64%
  • Rite Aid, +3.94%
  • Lam research, +3.86%
  • Goodrx, +3.5%
  • Beyond Meat, +3.3%
  • Intel, +3.28%
  • United Airlines +3.26%
  • Goldman Sachs, +2.79%
Losers today included:
  • Western Digital, -3.28%
  • Intuitive Surgical, -3.12%
  • Boston Scientific, -3.10%
  • Comcast -2.93%
  • Twitter, -2.37%
  • Facebook, -2.32%
  • Merck at -2.27%
  • General Mills, -2.16%
  • AMD, -1.94%
  • Visa, -1.93%
  • Intuit, -1.87%
  • Disney, -1.73%
  • Pfizer, -1.59%
  • Box, -1.57%
  • Morris -1.54%
  • MasterCard, -1.52%
  • Black Knight -1.38%
  • Nike -1.35%
  • McDonald’s -1.23%
  • Nio, -1.21%

SoftBank sits on $4B profit on options trade – FT

SoftBank up $4B

SoftBank up $4B
All the talk Friday was about SoftBank’s huge position in equity options and how it may have contributed to the blow-off moves we saw in the tech sector last week.
The FT reports that the trade is sitting on a $4 billion trade.
For all the attention it has gotten, that strikes me as a small number. Founder Masayoshi Son once lost $70B in the dot-com crash and the company is worth close to $100B. SoftBank lost $17.7B on WeWork and Uber last year.
The strategy has focused on options related to individual US tech stocks. In total, it has taken on notional exposure of about $30bn using call options – bets on rising stock prices that provide the right to buy stocks at a preset price on future dates. Some of this position has been offset by other contracts bought as hedges.
“It’s just a levered punt on the market,” said one person with direct knowledge of the trades. “The whole strategy is just momentum buying.”
Without knowing the details of the trade — including the timeline — it’s tough to evaluate. However if the whole strategy is really just momentum buying, then Thurs/Fri showed how quickly it could blow up.
For me though, the whole thing is overblown. $30B is notional (again, depending on the details), really isn’t that much.

US stocks tumble. Major indices have worst day since June (for S&P and Dow) and March (for Nasdaq)

Dow Jones falls -1025 points at its lows

The major indices are closing sharply lower. The major indices declines were the sharpest since June for the S&P and Dow.

For the NASDAQ, you have to go all the way back to March to have a worse trading day.

The Dow industrial average is now back negative in 2020. The declines snaps the S&P and NASDAQ 4 day winning streak. All 11 sectors of the S&P closed lower.
The final numbers are showing:
  • The S&P index fell 125.92 points or -3.52% at 3454.92. S&P index fell -4.28% at its lows
  • The NASDAQ index fell -598.34 points or -4.96% at 11,458.16. NASDAQ index fell -5.77% its lows
  • The Dow fell -808.50 points or -2.78% at 28292.33. Dow industrial average fell -3.52% at its lows

Bond’s send out a distress signal

All is not well-

The constant fall in Bond yields is sending out a signal that all is not well in the world. The tail end of last week may have seen some excellent earnings from facebook, apple, amazon and alphabet and that started a fresh equity rally early Friday. However, the fall of Bond yields is saying, ‘look out! There may be trouble ahead. For the uninitiated bond traders tend to take a more long tern macro view. So, when equities rise, but bond yields are falling that is a signal something is wrong.

If you can recall at the start of the year one of the big questions was which market is right? Falling and yields or rising equities? The answer has been, ‘the falling bond yield market’. So, the general rule of thumb is go with the bond yield market. Now, of course this doesn’t mean that a funny divergence can last for weeks and months. However, at the very least it is a warning sign. That warning sign is showing again.

All is not well- 

Yields are dropping

The 10Y Gilt yield (UK bond) hit a record low last week. The 10Y Bund (German bond) closed at its lowest level since mid-May on Thursday last week, while the 10 y UST (US bond) was down towards its lowest ever close last week too.



Why are they dropping?

The proverbial tea leaves are being read and a second wave of COVID-19 is being seen ahead. This will mean more monetary and fiscal policy help to get through the pandemic.So, yes the equity market has been rallying on the central bank support. However, the bond market is saying that the next stage of the global economy is fraught with dangers and a ‘V’ shaped recovery is more hope than reality.

US stocks end the day near session lows.

A soft ending to the stock day

 The US stocks are ending the day just off the lows for the day. The NASDAQ index by the way with a -1.27% decline.
The final numbers are showing:
  • S&P index -20.97 points or -0.61% at 3218.44.
  • NASDAQ index fell -134.17 points or -1.27% at 10402.09
  • Dow industrial average fell by -205.49 points or -0.77% at 26379.28
After the close Starbucks is reporting a less than expected loss and a sales beat. They also expect the 4th quarter to show a significant rebound. Earnings-per-share came in at $-0.46 vs. $-0.59 expectations. The revenues also be at $4.2 billion vs. $4.06 billion estimate.
Amgen earnings and revenues came in better-than-expected. However after an early rise, the price is currently trading lower in after hour trading.  Earnings-per-share came in at $4.25 I was higher than the $3 and 84 expected. Revenues grew by $6.21 billion vs. expectations of $6.18 billion.
These earnings-per-share came in a little bit better at $1.07 vs. $1.03 expectations. Revenues were little light however at $4.8 billion vs. $4.82 billion expected
Ebay earnings came and at $1.08 vs. $1.06 expectations. They also raised their year end outlook


Number 10 - Free Picture of the Number Ten1.  Follow the Rule of Three.  The rule of three simply states that a trade will not be made unless you can carefully articulate three reasons for doing so.  This eliminates trading from an indicator alone.

2.  Keep Losses Small.  It is vitally important to keep losses small as most all of large losses began as small ones, and large losses can put an end to your trading career.

3.  Adjust Stops.  When a trade is working move your stop loss up in order to lock in gains.

4.  Keep Commissions Low.  There is a cost to trading but there is no reason to overpay brokerage fees.  A discount brokerage is just as good as a premium brand name one.

5.  Amateurs at the Open, Pros at the Close.  The best time to enter trades are after lunch when the professionals are looking to get in at a better price than one provided in the morning.

6.  Know the General Market Trend.  When trading individual stocks make sure you trade with the general market trend or condition, not against it.

7.  Write Down Every Trade.  Doing this will allow you to learn what is working and what is not.  It will also help you determine what types of trades work best for your personality.

8.  Never Average Down a Losing Position.  It is a loser’s game when you add to a loser.  You add to winning positions because they are winners and are proving themselves to be such.

9.  Never Overtrade.  Overtrading is a direct result of not following a well thought out plan, deciding it is best to trade off emotion instead.  This will do nothing but cause frustration and a loss of money.

10.  Give 10 Percent Away.  Money works the fastest when it is divided.  When we share we prime the economic pump of the universe.

Trading is a game of rules.  We either make the decision to abide by them or we break them.  We do the latter at our own peril.

Economic data coming up in the European session

US equities snapped back to losses yesterday, though they finished off the lows at least. Futures are keeping mildly higher today but the overall mood remains more tepid as we start to move towards European morning trade.

The dollar is a touch softer but nothing significant, as major currencies are still keeping in rather narrow ranges for the most part today.
It is still going to be all about risk sentiment ahead of the weekend, so expect virus headlines to dominate once again to see if we can get more meaningful price action rather than the choppy back and forth we have been seeing since last week.
0900 GMT – Eurozone May construction output data
Prior release can be found here. Construction activity is expected to bounce back after bottoming out in April, but overall conditions should remain highly subdued still.
0900 GMT – Eurozone June final CPI figures
The preliminary report can be found here. As this is the final release, it shouldn’t have much – if any – impact to markets.
Also, at 0800 GMT we will be getting the latest ECB survey of professional of forecasters but it isn’t really much of a notable release.
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

S&P index leads the way. NASDAQ lags but closes higher for the 2nd straight day

S&P index closes just below breakeven level for 2020

The US stocks are ending the session with gains across the board. The gains are led by the S&P index which rose by 0.91%. The NASDAQ index lagged, but still gained 0.59%.

For the S&P index, it toyed with closing above the breakeven level for the year for the 1st time since February 25. However, that quest failed. The index is ending the day 0.13% from that breakeven level (2019 closes at 3230.78 while the close today is at 3226.56).

This week there has been a rotation out of the high flying tech stocks vs. the broader/industrial stocks. For the last 5 trading days the Dow industrial average is up 3.08% and the S&P index is up 1.79%, while the tech heavy NASDAQ index is up only 0.55%.
Nevertheless both the NASDAQ and the S&P index are up for 2 consecutive days. The Dow is riding a 4 day win streak.
The final numbers are showing:
  • S&P index +29.03 points or 0.91% at 3226.55
  • NASDAQ index up 61.915 points or 0.59% at 10550.49
  • Dow up 227.51 points or 0.85% at 26870.10.
Will tomorrow be the day for the S&P index to close the black? Maybe, but going forward headline news from more earnings releases, coronavirus cases, vaccines and therapeutics will continue to exert their influences. Each of which could upset the apple cart in a bullish or bearish direction.
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