So, That's Who Was Running the Country After Joe's Disastrous CNN Debate
AG Pam Bondi: We're Going to Find Out Who Leaked ICE's Operation in...
You'll Never Guess Who Used to Employ This Woman Caught Having an Antisemitic...
Who Is 'Big Balls' and Why Is CNN All Huffy About Him?
Investigating the Investigation, Not the Actual Scandal, and Confusion Over Who Is Actuall...
USA Today Uses Patrick Mahomes and Jalen Hurts to Lie About DEI
'60 Minutes' Sought to Impede Donald Trump and Run Cover for Kamala Harris
US Needs to Double Down on AI Supremacy
The ‘Cuckoo’s Nest’ and ‘The Gong Show’ Rolled Into One
From '45' to '46' to '47': Economic Drivers of the 2024 Presidential Election
2025 Offers New Opportunities for Next-Gen Satellite Broadband
How the Trump DOJ Can Counter the Threat From DeepSeek and Huawei
Donald Trump's Unspoken Insight
Trump’s Response to Time Magazine’s Attempt to Troll Him With Its New Cover...
DOGE Moves In: Consumer Financial Protection Bureau Targeted After Biden Holdover Fired
OPINION

While Cuomo Reinstitutes Lockdowns, Biden Threatens More

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
Advertisement
Advertisement
Advertisement
AP Photo/John Minchillo

It’s still about rotation, or in the case of yesterday’s session, re-rotation. Money came out of blue-chips names and back into mega-cap and momentum names. But the so-called Covid-19 stocks were mixed- and on balance, a disappointment.

Advertisement

Although the market bias is to the upside on any given session, your positions can be hit hard, and that is frustrating. That was the case yesterday with Main Street industries from restaurants to auto dealers.  Under pressure from the opening bell, things didn’t get any better after New York governor Andrew Cuomo announced curfews for a number of businesses

Lockdown Fever

Cuomo’s action follows an even more strict lockdown edict in Chicago and reports of the Biden team wanting a universal nationwide lockdown for six weeks this spring.

Such a mandate would be met with stiff opposition and test the independence of individual states. For many, the issue isn’t - and never has been the wearing of masks, per se - but being ordered to do so by the government. 

When the federal government assumes that much power, people become nervous.

Even if 100% of Americans agreed on the idea of wearing masks, the federal mandate is a slippery slope. The next time such a mandate takes place, the public might be in an 80% agreement with the course of action.

The time after that, perhaps it’d be 40% - but by then, there would be little room to push back since precedence would be established.

There are mental health issues, economic issues, states’ rights issues, and individual rights issues that will be ignored with a mandated order.

For investors (and I stress investors rather than traders), this volatility and hits to positions can be demoralizing. I would use the upside surge on vaccine news as a reminder these names will reverse higher quickly when the coast is clear. Right now, the bigger threat is locking down the entire nation for six weeks, which would lead to more economic carnage.

Advertisement

I am least concerned about the stock market as I am to what happens to the nation and what happens to our voices. Most publicly held restaurant chains and auto dealers will be fine and take market share by default, while smaller single family-owned businesses are pushed into the abyss of bankruptcy.   The stronger public names will roar back, but too many small businesses will vanish forever.

 Market Breadth

As you might imagine, the NASDAQ enjoyed positive market breadth, although declining stocks were higher than what a 2.0% move would suggest.

Market Breadth

NYSE

NASDAQ

Advancing

1,531

1,983

Declining

1,513

1,512

52 Week High

47

97

52 Week Low

7

8

Up Volume

1.71B

2.37B

Down Volume

2.76B

1.33B

Hotline Model Portfolio Approach

We added a new position in the Hotline model portfolio. I am spying taking a few names for less than I initially wanted to raise funds and mitigate near-term angst. 

It’s important to keep your head on a swivel under these circumstances and not panic. Note: managing risks and building cash is not the same as panicking.

Today’s Session

Keep an eye on the bond market, which was closed yesterday in observation of Veterans Day. The ten-year yield has taken off like a rocket and is now racing toward 1.00%. Those folks that might have just climbed out of a time capsule from 2019, or any year before then, would be shocked this is even a conversation.

Advertisement

However, breaking out through a 1% yield on the ten-year yield has become a big deal. The yield flirted with 0.50% in early August, so it’s on the verge of doubling. There would be some psychological resistance there, but the next big technical test begins at 1.50% through 2.00%.

I think the move is good news for the economy and should help stocks, as big chunks of money come out of bonds seeking new homes. 

The relationship between rising bond yields and ta higher stock market is remarkable. It’s not about day-to-day actions, but over a period of time, which is far longer than a year, the returns average 20%. Keep that in mind as you add the ten-year yield to your stock screen.

Right now, those yields are lower in part to rising concerns about Covid19 spread and the unrelenting reporting in financial media. 

Moreover, the Biden team pushing for a six week nationwide lockdown is very worrisome stuff.  Many of those nimble, hard working medium and small businesses that have held on would endure a final economic blow.

Chipping Away But Pandemic Red Flags

Initial jobless claims declined to 709,000 from 751,000 against consensus of 740,000. This is more positive news. 

To see the chart, click here.

Continuing claims also came in better than expected to 6.79 million (the street was at 6.90 million).

To see the chart, click here.

There are still more than 21.0 million Americans on some form of unemployment benefits.  Pandemic Emergency Unemployment Claims +159,776.

Advertisement
  • CA +88,461
  • IL +25,633
  • MI +32,674
  • NY +18,191

Technical View

When indices open demonstrably higher or lower than where they closed, gaps are created in the charts.  According to stock market technicians, those gaps have to be filled, which means at some point, the price returns to that prior closing price.

For example, on Monday the gap was actually filled on the same day (see arrow).  The big run in the stock market since last week has left a trial of gaps (circles).  I do not believe gaps have to be filled, but they are good guides for potential resistance and support points.

Key support for the S&P 500 is 3512.

Join the conversation as a VIP Member

Recommended

Trending on Townhall Videos