The Bear Den by Shortside Jonny
Monday, December 14, 2020 – DIA 299.10 -.61%, QQQ 304.04 +.73%, SPY 354.66 -.45%
No significant data released. The market opened strong and closed mixed, with selling towards the close, as NYC Mayor De Blasio stated that a full pandemic shutdown might be ordered for the city. A big winner on the day was Alexion Pharmaceutical (ALXN) 156.31 +29.20% which agreed to be acquired by AstraZeneca (AZN) 50.03 -7.81% in a 39-billion-dollar deal. Incyte Corporation (INCY) 86.81 +6.78% announced favorable data on a lung treatment for COVID-19 related Cytokine storm. BioMarin (BMRN) 82.85 +4.23% hit a 3-month high. The stock has been basing since an August collapse. Pandemic losers such as energy stocks came under pressure, Occidental (OXY) 19.17% -8.23%, Chevron (CVX) 89.44 -3.26%, Diamondback (FANG) 46.95% -6.31%, Apache (APA) 15.31% -4.91%, Devon (DVN) 15.37 -4.89%, and Marathon (MRO) 6.72% -4.82%. all were hit hard.
Tuesday, December 15, 2020 – DIA 302.62 +1.18%, QQQ 307.59 + 1.07%, SPY 369.56 +1.34%
Industrial Production posted a mostly inline .4% vs. .3% expected. House Speaker Pelosi indicated she would call a meeting of the leadership of her caucus to address COVID-19 related spending legislation, heartening traders, and investors expecting a stimulus bill. After state electors met and voted for Joe Biden, Senate majority leader Mitch McConnell made a statement to the press that “We have an official President-Elect”, which strengthened the view that a successful transition of power would occur on January 20. Apple rallied (AAPL) 127.88 + 5.01% after it was reported they would increase iPhone production by 30% in 2021, sending the shares to a 3-month high. Chinese tech company Baidu (BIDU) 185.50 +13.83% was up when news reports surfaced it was considering entering the electric vehicle market. Tesla (TSLA) 633.25 -1.03% traded slightly lower on the reports.
Wednesday, December 16, 2020 – DIA 302.15 -.16%, QQQ 308.98 +.55%, SPY 370.17 +.16%
Retail Sales slumped as the effect of past fiscal stimulus has begun to wind down, coming in a weaker -1.1% vs. -.3% expectation. The focus of traders was the FOMC post-meeting statement release. The Fed will extend the $120 Billion per month asset purchase program and extend the dollar swap & repurchase facility after March 21. The “Dot Plot” of FOMC members shows zero rates until 2023. Chairman Powell said direct financial aid to businesses and individuals may be necessary (in a nudge to Congress). The session was mixed with the NASDAQ leading the way. Microsoft (MSFT) 219.28 +2.41% moved to a one month high, having been in a 3-month trading range. Saleforce.com (CRM) 223.62 +1.58%. BioMarin (BMRN) 89.28 +5.00% continued higher from Monday’s breakout. Workday (WDAY) 230.59 +4.69%. On the downside Dish Network (DISH) 31.51 -11.69% fell on the announcement of a 2-billion-dollar convertible debt deal.
Thursday, December 17, 2020 – DIA 303.49 +.44%, QQQ 311.00 +.65%, 372.24 +.65%, SPY 372.24 +.56%
Building Permits MoM (Month over Month) for November came in at 1.639M vs. 1.55M expected. Housing starts came in at 1.547M vs. 1.53M for the same period. Continuing Jobless claims came in slightly better than expected 5.508M vs. 5.598M. The Philadelphia Fed manufacturing index was weaker than expected at 11.1 vs. 20. Initial Jobless claims were higher at 885K vs. 800K expected. The hot group of the day was home builders, as Lennar (LEN) 79.95 +7.62% reported EPS of $2.82 vs. an expected $2.32 & announced gross margin expansion to 25%. Pulte Home (PHM) 44.78 +5.36% moved higher on that news as well. On the downside AT&T (T) 29.62 -2.21% was downgraded to equal-weight at Morgan Stanley. Two stocks with significant gains since the end of October came under selling pressure/profit-taking, Marathon Petroleum (MPC) 40.58 -2.57% and Omnicom Group (OMC) 63.31 -2.21%.
Friday, December 18, 2020 – DIA 302.01 -.29%, QQQ 310.06 -.30%, SPY 369.15 -.41%
No meaningful data released. Stocks opened lower across the board as more information became publicly available of a major hack of US government computer systems. The infiltration caused damage to other nations and disruptions to business worldwide. The hack is related to software provided to the US government by SolarWinds Corporation (SWI) 14.18 -19.43%. The markets continued to trade off until a late-day rally recovered most of the day’s losses. Cybersecurity firm Fortinet (FTNT) 145.85 +6.91% was up on the news. And inexplicably FireEye (FEYE) 19.23 +33.75% had a huge rally on the news. Back on December 8th, FireEye reported in a public statement that “A nation with top-tier offensive capabilities” had infiltrated FireEye’s network and gained access to the company’s suite of Red Team hacking tools.
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