Saved by a Vaccine- November 13th, 2020

As the election slides behind, the pandemic moves to the front. This week the news of a highly effective vaccine started the markets off with a bang. The promise of a vaccine that could eliminate the Covid affect on humans is meaningful. Much like the picture below, we can see where we want to get to, but getting there won’t be smooth. The vaccine with such high efficacy rates
was definitely the start of a bridge to a more normal world. The hurdle now is the spiking Covid condition now.

For the most part the rally continued from the prior week. Without getting into all the details in the summary here, the real odd part was the Nasdaq was the worst performing market index I track in the last table in the newsletter and it happened on an up week. All the other data was remarkably supportive of higher prices, but a waning Nasdaq 100 leaves me suspicious.

The rally was global this week. To me, this continued the initiation thrust with another week of more than 1000 stocks up 10% and more than 1000 stocks up 5%! That’s just huge. An initiation thrust is what you see to start a new rally. It requires sustained buying and big positions to push the market up this hard.

Indexes around the world and some of the ETF’s also soared to new highs. On the monthly conference call, I worked through a lot of the top industry groups and many were breaking above resistance. SO much of that continued. I will say that all five defensive sectors (XLP, XLV, XLU, XLF, XLRE) all broke out and held this week. One of the harder weeks to decipher whats going on when tech and discretionary didn’t on a big week.

Summary: I am bullish and am invested as the SSIH suggests being invested. I am watching to understand the changing landscape on tech. Financials, industrial metals, energy and Electric vehicle trades all look promising. We are testing prior highs, so breakouts need to hold.

Let’s jump into the charts. Click below to view the full PDF version.