Last week was an incredible week for the market, which fought a tug of war between future vaccines and reopening the economy against the current Covid-19 spikes and increased lockdowns. By the closing bell on Friday, the verdict was in; Wall Street is skipping the dark winter predicted and orchestrated by politicians and looking to a bright spring and summer driven by scientists.
Market breadth was extremely bullish, especially on the New York Stock Exchange, as Technology names stumbled about with other lockdown winners. The rally is broadening, and that’s great news.
- 278 average gain +25.13%
- Top twenty average gain +89.29%
- 227 average los: -20.81%
- Bottom twenty average decline -57.40%
- 578 average gain +68.41%
- Top twenty average gain +533.88%
- 436 average loss -22.74%
- Bottom twenty average decline: -66.03%
The interesting aspect of rotation is how the move brings the same kind of parabolic action to normally low Beta sectors and stocks.
S&P 500 Index
Communication Services XLC
Consumer Discretionary XLY
Consumer Staples XLP
Health Care XLV
Real Estate XLRE
Keep an eye on energy to continue to outperform after the index soared above its 50-day moving average. WTI needs to breakout soon, but the stocks could lead the commodity near term.
Hotline Model Portfolio Approach
We took profits in a Technology stocks and are adding to Healthcare in our Hotline Model Portfolio.
Moderna (MRNA) comes through with a vaccine that one-ups Pfizer’s (PFE) vaccine candidate announced last Monday. The news was expected, although not sure anyone was looking for 94.5% effectiveness. Look for more short covering and rotation into reopening stocks and a return sooner rather than later to normalcy. This is powering Boeing (BA) among other names. Keep an eye on Russell 2000, which is at a double top but has huge momentum.