11Aug10:46 amEST

Vaccines of the World Unite! All You Have to Lose is Your Efficacy

Despite a fair amount of understandable skepticism greeting news this morning of Russian approval for a Coronavirus vaccine, futures reacted sharply especially in the Dow and small cap-led Russell. 

As it stands now, coming up on ninety minutes into the cash session, the same dynamic of the mega cap value names in the Dow (BA CAT JPM, to name a few) and the small caps, alongside the re-opening plays like casinos, cruise lines, airlines, are offsetting more softness in large cap tech. 

Seeing as both the Dow and IWM are clearly stretching well into overbought territory up several sessions in a row, bulls will likely pin their case on a seemingly endless game of rotation back and forth between value and growth stocks. 

While that certainly is a possibility, there are a few notable distinctions about global markets which may throw a wrench in that thesis. Specifically, rates are back on the upswing, as TLT sells off further this morning. Recall that TLT has risen with equities pretty much in lockstep since at least early-June. Moreover, one of the more overlooked aspects of the market crash back in March is that Treasuries actually sold off violently with stocks from March 9th-18th. In addition, the precious metals and miners are finally shaking out some hot money latecomer longs While not necessarily a direct sign of stocks about to do the same, this action is another sign of some changing winds. 

Regarding chasing up some of the airlines or other re-opening plays, names like AAL CCL DAL MGM UAL WYNN are all overbought in overarching downtrends. This is typically not the makings of a sound long setup. If anything, another hopefully rally, not unlike what we saw in early-June, sets the stage for a new round of short entries into these sectors. 

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