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The market is worrying about Covid again. The lockdown measures in parts of Europe and the rise of new Covid cases are definitely impacting money flows. Look at the price action in the past couple of weeks. Anything related to “the reopening” and “going back to normal” has been under heavy pressure – airlines (JETS), leisure and entertainment (PEJ), oil & gas (XLE). The small-cap ETF -IWM, has been showing relative weakness too. If IWM cannot bounce in the 230-232 area, we can talk about a failed breakout.
In the meantime, capital has fearlessly been flowing into mega-cap tech stocks which have been among the biggest winners in a “work-from-home world”. AAPL, MSFT, NVDA, and SHOP reached new all-time highs. AMZN and GOOGL are basically there too. FB is acting constructively above its 50-day moving average. In addition, vaccine stocks, MRNA, and BNTX are bouncing after 50%+ correction.
Semiconductors ETF – SMH, closed at new all-time highs inspired by another strong earnings report from Nvidia. There’s a lot of strength in the sector – NXPI, LRCX, MU, ON are just a few examples.
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