November 17, 2020

Stock Markets Pause Rally, Vaccine Hope Fuels Optimism

Stock Markets Pause Rally, Vaccine Hope Fuels Optimism

Moderna announced the results of its coronavirus vaccine yesterday with a much higher efficacy rate than Pfizer. This wasn’t the only reason that we have seen the ‘risk-on’ trade coming back. Traders are pleased to know that there will be fewer challenges in terms of logistics, meaning it doesn’t have to be transported at freezing temperatures, which is a requirement for Pfizer’s vaccine. 

The Asian stock market marched on the back of vaccine hope. The ASX 200 index closed higher with a gain of 0.21%. The HSI index advanced 0.06%, while the Nikkei index increased by 0.42%. The Shanghai index fell by 0.21%.

Dow Jones and S&P 500: Market Breadth

The Dow Jones’ market breadth is reaching its optimal level. 93% of the Dow Jones stocks traded above their 200-day moving average. This is a change of +6% from a day earlier.  

The S&P 500 stock breadth gained further momentum. 88% of the shares traded above their 200-day moving average. This is a change of +3% from a day earlier.  

Dow Jones Futures Today

The Dow Jones futures are trading lower by 93 points today. In terms of economic data, investors will be looking at the Core Retail Sales data, which is due at 1:30 PM GMT. The forecast for the data is 0.6%, while the previous reading was at 1.5%. 

The Dow Jones futures are near their all-time high, while the cash index recorded an all-time high yesterday. On the 4-hour time frame, it seems that the bulls are still very much in control of the price and they are likely to remain in control of the price as long as the Dow futures stay above the 50, 100 and 200-day SMA. However, it is also important to keep in mind that the price has formed a possible double top, a bearish pattern. As for the RSI, the price has reached an overbought zone which means retracement. 

The S&P 500 futures, which represent the wider stock market, are still shy from reaching their all-time high. The S&P 500 is in a strong uptrend as the 50-day SMA is trading above the 100 and 200-day SMA on the 4-hour time frame. Moreover, we also have some evidence that the 100-day SMA is also trading above the 200-day SMA, another bullish signal. The Relative Strength Index, RSI, has reached its oversold zone, and this means caution.

Stock Market Rally

The S&P 500 stock index soared yesterday; the index advanced 1.16%. The industrial sector led the index higher – 9 out of 11 sectors closed higher. 

The Dow index also closed at an all-time high yesterday; the Dow stocks moved the index higher by 1.60%. 26 shares rose, four shares declined. 

The NASDAQ composite, a tech-savvy index, closed with a gain of 0.63%. 

S&P 500 Leaders and Laggards: TechnipFMC and Illumina  

TechnipFMC stock contributed the largest gain, advancing 12.2%. Illumina was the largest drag; it dropped by 3.93%. The S&P 500 stock index is up 12% so far this year.

Dow Jones Leaders and Laggards: Boeing and P&G 

Boeing once again contributed most of the gains for the index, it advanced 8.17%, while P&G was the largest drag, it declined 1.28%.