The positive news on a vaccine out of Moderna yesterday fueled another nice rally in the stock market...as the DJIA, S&P 500, Russell 2000 and the Nasdaq all rallied strongly. (No, the Nasdaq did not rally as much as the others, but it was still up 0.8%.) The breadth was quite good...at more than 5 to 1 on both the S&P 500 and the NYSE Composite Index. Also, the market closed on its highs for the day...with 10 out of the 11 S&P groups closed in positive territory. (The healthcare group closed very slightly in negative territory.) Finally, the “Dow Theory” followers were quite happy...as the DJIA and the DJ Transportation Index both closed at record all-time highs!
Not everything was bullish, however. The composite volume was a whopping 42% lower than last Friday (when Pfizer made its own announcement), so the enthusiasm was not quite as strong during yesterday’s advance. (Actually, the lower volume probably had more to do with the lower level of activity from the quant funds...who got clobbered a week ago. Either way, lower volume is not what you want to see.)
More importantly, we’d also note that the lack of movement in the “other markets” (fixed income, currency markets) that we highlighted in the morning yesterday...continued throughout the day. Therefore, they are some signs that the rally might actually be running out of steam on a very short-term basis. (Of course, that’s a lot easier to say now that the S&P futures are trading 20 points lower this morning...but it’s something we’ve been thinking could/should take place for a couple of days.)
We certainly do not want to sound like we’re looking for a significant decline right now. We’re just saying that several signs from yesterday’s broad action within all of the markets are ...