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“Life is not about waiting for the storm to pass, it is about learning to dance in the rain.” – Unknown
With futures trading higher, technically you can call it a turn-around Tuesday, but based on current levels, US markets are set to only erase a fraction of their declines from Monday. There’s been a ton of earnings reports to contend with this morning (mostly positive) as the pace nears its peak for the reporting period.
Much of the weakness over the last several days has been attributed to rising COVID case counts and the lack of a stimulus bill, but we wouldn’t dismiss the impact of earnings. With expectations so high heading into the reporting period, the expectations bar was set so high that even with the great results we have seen so far, it’s been hard for investors to get too excited. The fact that the most recent peak for the S&P 500 was on October 12th- the day before the major banks started to kick off earnings season- is probably not a coincidence.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, key earnings data from the US and Europe, Korean GDP, trends related to the COVID-19 outbreak, and much more.
With Monday’s shellacking in the equity market, just about every well-known US index ETF has seen a negative return over the last five trading days. The one exception is the S&P Small-Cap ETF (IJR) which is up a paltry 0.12%. As shown in the snapshot from our Trend Analyzer screen, unlike most recent pullbacks where large-cap stocks held up the best while small and mid-caps lagged, in the recent sell-off it has been the complete opposite. This time around, it’s the large-cap ETFs of the DJIA (DIA), S&P 100 (OEF), Nasdaq 100 (QQQ), and S&P 500 (SPY) that are down the most and have broken below their 50-DMAs, while most mid and small caps ETFs have outperformed and are still well over 2% above their respective 50-DMAs.
While all of the ETFs have all seen recent pullbacks of varying degrees, one common characteristic among them all is that they’re “Timing” scores all rank as Good.