The news that ABT could be coming up with a coronavirus test that gets results in 5 minutes and that JNJ announced a lead vaccine candidate over-shadowed the rising numbers of Covid 19 cases and deaths from over the weekend…to help the stock market rally more than 3%. It also got help from the rebalancing that seems to be going on for those investors who need to keep their equity market weighting up at a specific level.
We would point out, however, that the internals in the market yesterday were not as strong as they were during last week’s strong mid-week rally. The volume was 22% below the March daily average…and breadth was quite disappointing for a day that took the three major averages higher by 3%. It was just 3.5 to 1 positive on the S&P 500 index…and just 1.5 to 1 positive on the NYSE Composite Index!!! The upvolume vs. down-volume was only slightly positive as well. Thererefore, the “internals” of the stock market yesterday were not anywhere near as impressive as they were during the three-day midweek rally last week.
That said, it’s not a big surprise that the internals were not all that good. Given that the uncertainties surrounding the coronavirus are still very large, it’s no surprise that investors are not piling into the market and buying stock hand over fist. Yes, the “internals” were quite good last week, but that came in the immediate after-math of the end of some massive “forced selling.” When the market becomes “washed-out” after “forced selling” ends, the internals are always going to be exceptional in that initial rally. So the fact that they’ve faded a bit this week is not a major problem…at least not yet.
On top of the news from ABT and JNJ ...