• Comment for October 1, 2020

    Money continued to move in the markets yesterday, on expectation of a soon to be signed relief package. The late afternoon dump was due to some cold water that was dropped on the markets by a negotiator. However, things seem to have settled overnight as the Republicans agreed on a compromised solution in order to keep the markets high until election day.



    The NQ8 sector attracted more money than the small caps.









    The Cumulative Tick turned also negative yesterday.



    If we look at the futures, we can see that the negativity that followed the debate of the previous evening was erased by promise of new money. On the other hand, S&P500 investors - algos - seem to be quick on the sell button on bad news.





    ETFs, which are better used by retail investors and index following funds, show accumulation into the QQQ, but heavy selling of SPY and IWM. This tells us of uneasiness and on the US economy and on the presidential election outcome, which might lead to civil unrest. Civil unrest would hit the small caps harder than the broadly international larger caps.







    Interesting to also note that the current relief package that is almost certain to be signed should sink the US$ as fresh money will come out of thin air. However, large players do not support lower prices. This is I believe also a sign of uncertainty: US$ cash is not really put back to use in the current context.





    As a side story, biotech are under accumulation here:



    Conclusions:

    After the current relief package, there will only be uncertainty until... and after election day.
    I believe that the market is setting up itself for a 'sell-the-news' type of move.