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Futures are continuing the momentum from last week as the S&P 500 is poised to open up over half of a percent. The key driver this morning? Momentum. There’s literally no data on the economic calendar to speak of and the pace of earnings is at a trickle. Traders are out in full force again bidding up stocks tied to the re-opening trade as the airlines ETF (JETS) is up over 5%, Boeing is up over 8%, and bankrupt Hertz is up 25%. The wackiest move of the day, though, belongs to Chesapeake (CHK). Shares are up nearly 100% in the pre-market after rallying over 75% on Friday. Even after the rally of the last two days, though, CHK is down 90% from its 52-week high more than 99% from its all-time high.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, European markets, the latest Sentix data, global and national trends related to the COVID-19 outbreak, and much more.
By all accounts the last week was extraordinary for the stock market. Sure, we’ve seen stronger weeks in the last several months, but they came from levels where prices were down sharply. After what had already been a near-record rally for US stocks in such a short period of time, the gains were only piled on in last week’s rally.
Of the 11 S&P 500 sectors, their average gain last week was over 6% and they are now an average of 13.8% above their 50-day moving averages! In our Trend Analyzer tool, we track the OB/OS conditions of 14 different major US index ETFs on a daily basis, and through Friday’s close, last week’s average performance was a gain of 6.5%. The top-performing index ETF on the week was the Core S&P Small-Cap ETF (IJR) which rallied just under 12%, while the Nasdaq 100 (QQQ) was the weakest performer of the week gaining 2.7%. In any other week, a rally of 2.7% would be a reason to celebrate.
Unfortunately, markets don’t only go in one direction, though, and after the gains we saw last week, all but two of the major index ETFs we track in our Trend Analyzer are now at ‘Extreme Overbought’ levels. That doesn’t mean we necessarily have to go down from here, but it does make the odds for at least a short-term period of consolidation more likely. If you are a long-term investor that would be a good thing.