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Today’s Summary
Wednesday, December 30th, 2020
Indices: US Stocks closed higher in today’s session with the Dow Jones Industrial Average gaining 74 points or 0.24%. The S&P 500 and Nasdaq inched higher by 0.13% and 0.15%, respectively. Small-Caps outperformed, rising 1.05%.
Sectors: 7 of the 11 sectors closed higher. Energy led, gaining 1.57%. Communications lagged, falling 0.67%.
Commodities: Crude Oil futures gained 0.83% to $48.40 per barrel. Gold futures moved higher by 0.56% to $1,893 per ounce.
Currencies: The US Dollar Index dropped 0.43% to its lowest level in more than 2 years.
Interest Rates: The 10-year US Treasury yield inched lower to 0.923%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
$SPX up 14% the past 2 months. Only 7 other occurrences in 40 years. 6 of prior 7 went much higher in months ahead because all happened at major lows (like March of this year); 1987 started after SPX dead flat for 9 months (box).
So, current instance nothing like the others pic.twitter.com/beQ4eSrPjl
— Urban Carmel (@ukarlewitz) December 30, 2020
Today’s Chart of the Day was shared on Twitter by Urban Carmel (@ukarlewitz). It’s a monthly candlestick chart of the S&P 500 over the past 40 years, along with a 2-month rate of change indicator below. The S&P 500 is up more than 14% in the past two months. As Urban points out, this sort of strength is rare and has only occurred seven times in the past four decades. As you can see, nearly every one of these occurrences saw further gains in the months that followed. The most recent occurrence took place in May of this year, and the S&P 500 is up more than 20% since. It’s easy to say stocks have gone “too far too fast” but history shows us that strength often begets more strength.
Quote of the Day
“If I have seen further, it is by standing upon the shoulders of giants.”
– Isaac Newton
Top Links
5 Charts to Follow as 2021 Unfolds – Jay on the Markets
Jay Kaeppel shares five charts to watch in the new year.
Back-to-Back Big Years for Technology – Bespoke
Bespoke breaks down the performance of the Technology sector over the past two years.
The Improbability of a 3-peat – SentimenTrader
As noted in the link above, the Technology sector has been the strongest sector for back-to-back years. In this note, Jason Goepfert explains that it would be very rare to see the Technology sector lead for three straight years.
Gold Breaks to 19-year Lows Relative to Nasdaq Stocks – All Star Charts
JC Parets discusses the underperformance in Gold and what it could mean for other asset classes.
Last Trading Day of the Year: Nasdaq Down 15 of the last 20 – Almanac Trader
Seasonality expert, Jeff Hirsch points out that the last trading day of the year (tomorrow) has a bearish bias.
Top Tweets
In 2020, the Russell 3000 Index (of ~3,060 big and small stocks) is up 18%.
Only about 980 (or 34%) of them are up more than the index year-to-date.
Stock-picking is hard, even when all your friends are bragging about it.
— Callie Cox (@callieabost) December 30, 2020
Took a rest over time rather than a major pullback… ready for the next leg higher? pic.twitter.com/dCVsJoOZnn
— Grant Hawkridge (@granthawkridge) December 30, 2020
Equal weight Russell 1k continuing its monster spread vs cap weight since the March lows.. $IWB $EQAL pic.twitter.com/whb0PEf4Do
— Drew Wells, CMT, CIMA® (@DrewTheCharts) December 30, 2020
RSI(14) for the Russell 2000 ETF $IWM was above 70 for 16 days. This streak, which ended on Tuesday, was the longest since October 2017. IWM stalled for a month after the last streak was broken. $RUT pic.twitter.com/l8RY3oYaqR
— Arthur Hill, CMT (@ArthurHill) December 30, 2020
$VEU All World Ex-US ETF, flagging Coppock reversals from negative territory. Room to run? pic.twitter.com/POR3qeP9CW
— Mark Ungewitter (@mark_ungewitter) December 30, 2020
Considering international markets were breaking down months before the US in Q1, seeing new highs across the board can only be seen as broad-based demand for stocks as an asset class
Vietnam making new 52 week highs today, speak about risk appetite… $VNM pic.twitter.com/FWFzl6irha
— Louis Sykes (@haumicharts) December 30, 2020
$TLT coiled and looks like it wants to move higher in a hurry. Picked up a few Feb calls. If it doesn't go soon, or starts moving down will get out quick pic.twitter.com/N2ZJlElppA
— Gregory Krupinski (@G_krupins) December 30, 2020
As I've noted before, 80-month MA breakdowns lead to average declines of -17.46%. So, I remain bearish on the dollar as it continues to meltdown the 10-day MA; a break above would only set up a bullish short-term trade but not invalidate the longer-term bearish move.$DXY pic.twitter.com/hTNJahrnqL
— Matthew Timpane, CMT (@mtimpane) December 30, 2020
29k #bitcoin pic.twitter.com/3yJJSos5UT
— jeroen blokland (@jsblokland) December 30, 2020
Grains getting after it with a 14-period RSI > 70. #Wheat, #Corn, #Soybeans $ZC_F, ZW_F, $KE_F, $MWE_F, $ZM_F, $ZS_F, $ZL_F pic.twitter.com/oeVYkdw5LY
— Ian Culley (@IanCulley) December 30, 2020
It may be bad for your health, but it's been great for our portfolio-and looks like its just getting started #sugar @SB 200-weekly MA pic.twitter.com/0EWYOVLyHp
— Michele Schneider (@marketminute) December 30, 2020