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Today’s Summary
Wednesday, November 4th, 2020
Indices: US Stocks continued higher in today’s session with the Dow Jones Industrial Average gaining 368 points or 1.34%. The S&P 500 and Nasdaq gained 2.20% and 3.85%, respectively. Small-Caps significantly underperformed, with the Russell 2000 closing flat on the day (+0.05%).
Sectors: 7 of the 11 sectors closed higher. Health Care led, jumping 4.44%. Materials lagged, falling 1.70%.
Commodities: Crude Oil futures continued higher by 3.96% to $39.15 per barrel. Gold futures fell 0.74% to $1,896 per ounce.
Currencies: The US Dollar Index rose 0.15%.
Interest Rates: The 10-year US Treasury yield dropped to 0.758%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
$IWM is not up as much as $QQQ today, but the small-cap ETF sports a rising channel since June and an island reversal the last 7 days. Note that IWM forged a higher high in October and QQQ remains below its early September high. pic.twitter.com/4mIuR2K1DW
— Arthur Hill, CMT (@ArthurHill) November 4, 2020
Today’s Chart of the Day was shared on Twitter by Arthur Hill (@ArthurHill). It’s a daily bar chart of the Russell 2000 ETF, $IWM, over the past six months. Yesterday, we highlighted the potential for a post-election surge in Small-Caps. We clearly didn’t see that today, as the Russell 2000 underperformed the S&P 500 by the second widest margin in the past decade. But as we know, one day does not make a trend. Arthur points out that there are a number of reasons to favor Small-Caps here. For starters, $IWM formed a bullish island reversal pattern over the past week. Secondly, it was the only one of the four major indices to have broken above its September highs last month. In general, Small-Caps are risker than their Large-Cap peers. For this reason, they serve as a good barometer of risk appetite for the broader market. The idea is, if there’s demand for the smaller/risker stocks, then we’re likely in a market environment where stocks, as an entire asset class, look attractive.
Quote of the Day
“The world has a funny way of not coming to an end.”
– James Grant
Top Links
2 Post-Election Charts You Need to See – LPL Financial Research
LPL Financial Research shares two interesting charts to keep in mind as we look past the election.
Utilities Stocks Power Higher As Sector Shows Strength – See it Market
David Keller lays out the bull case for the Utilities sector.
Investors Hands Were Tipped Last Night! – Stock Market Today
Dan Russo offers his thoughts on yesterday’s wild overnight session and highlights a few trends worth watching in the near-term.
Stock Volatility In Sight – Dana Lyons
Dana Lyons examines the implications of an unusually high ‘Excess VIX’ reading.
Even if We Knew – The Irrelevant Investor
Here’s a good read from Michael Batnick. He explains that even if you knew what would happen in the future, you still probably wouldn’t know how the market would react.
Top Tweets
When the S&P 500 rallied the day after a presidential election, it was higher 3 months later 90% of the time by an average of +4.4%.
When it dropped the day after, then it was higher 3 months later only 50% of the time with an avg return of -0.9%.
Read into it what you will.
— SentimenTrader (@sentimentrader) November 4, 2020
$QQQ outperformed $IWM by ~440 basis points today, second widest margin of at least the last ten years.
(Widest occurred in March 2020)
— Will Hershey ? (@maybebullish) November 4, 2020
How unusual was the spread between large & small caps today?
Since 1995, the S&P 500 has only been up over 2% and the S&P 600 down more than 1%, three times. pic.twitter.com/YFsEq4gr3H
— Andrew Thrasher, CMT (@AndrewThrasher) November 4, 2020
Russell 2k vs NASDAQ 100 ratio. If smalls are going to start outperforming the tech titans..this is the zone where it would make sense to start, despite the spread today at the open. $RUT $NDX $IWM $QQQ pic.twitter.com/aXvPcvSKvD
— Drew Wells, CMT, CIMA® (@DrewTheCharts) November 4, 2020
Worst day for regional banks relative to the S&P 500 ever including the financial crisis. Deflation much? pic.twitter.com/aIN8ASTuqS
— Dave Mazza (@MazzaDave) November 4, 2020
Best combined return for $TLT + $SPY since April. Outside of this year, it would be the best since 2009 pic.twitter.com/ah28yT9l6a
— Sarah Ponczek (@SarahPonczek) November 4, 2020
#yields — US 30-year yields reject key resistance. pic.twitter.com/380WjD7gJ2
— Nautilus Research (@NautilusCap) November 4, 2020
The real range, however is in bonds, as 10-yr yld lays out a number of possible #surprise scenarios for $SPX pic.twitter.com/RPJJXPffgf
— Abigail Doolittle (@TheChartress) November 4, 2020
Biggest intraday bearish reversal (measured by an upper wick on a daily) for the $DXY Dollar since June 24, 2016: pic.twitter.com/TEtZKyq9dj
— John Kicklighter (@JohnKicklighter) November 4, 2020
if we're above those 2019 highs in the #bitcoin I can't make a bearish case pic.twitter.com/qx24XmzvCC
— J.C. Parets (@allstarcharts) November 4, 2020
$GOOGL (Internet) Relative highs preceded absolute highs. pic.twitter.com/xnmWo61Edm
— Pratyush Tulsian (@PrattyCharts) November 4, 2020
Chinese tech stocks are breaking out to all time highs. $KWEB $CQQQ pic.twitter.com/d0zoYTewyT
— Greg Rieben (@gregrieben) November 4, 2020
Cowabunga – Game On! pic.twitter.com/QsYPl8LVgA
— Linda Raschke (@LindaRaschke) November 4, 2020
Not often you see the S&P 500 up over 2% on the same day that more stocks in the index were down than up. ?
— Bespoke (@bespokeinvest) November 4, 2020