Trend 1169　Vaccine stocks: Boeing's Warp Speed　Series 5　Mr. Tetsuo Inoue

Mr. Tetsuo Inoue, today, November 25, 06:57, we are pleased to present a published article.

The Nikkei 225 RSI rose to 162.21%. The Dow topped 30,000, but the RSI fell by 0.67 percentage points to 148.99%.

Buybacks accelerate. NYSE volume exceeded 1.2 billion shares, and the VIX is at its lowest since August 18.

The Boeing flight isn’t stopping yet. Yesterday, in this "tide," I wrote that of the Dow’s 327.79-point gain, Boeing contributed $78 (the largest). This morning, with last night’s 454.97-point rise (the Dow’s first time above 30,000), it contributed $46 (second).

As expected, the three names that had a combined negative contribution of $28 the day before (three names) turned positive by $54 last night, but collectively it was not far from the contribution of one Boeing. Last night, in addition to Boeing, there were positive contributions from Goldman Sachs (ranked 1st): +$57, and JPMorgan Chase (ranked 4th): +$36, and there was buybacks and short-covering in financial stocks that were not expected to benefit under a Democratic administration.

This move occurred in after-hours trading and formed a classic risk-on mode—rising stocks and oil, falling bonds and gold—that hasn’t been seen so clearly after hours in a long time—and that sentiment spilled into financial stocks. The point made is that "rising stocks, falling bonds = rising interest rates" are both favorable materials for financial stocks.

In particular, buyback activity seems vigorous. As noted in MD, NYSE volume surpassed 1.2 billion shares, about 1.5 times the normal level (I estimate normal around 800 million). The fact that volume is expanding is evidence that buybacks are being hurried. Since November began, the average daily volume has been 1,026 million shares, exceeding 1 billion shares, which is a 20% increase from October's average of 846 million shares (excluding the final trading day when volume expands).

Also, in November there were five occasions where volume exceeded 1 billion shares; four of these days the Dow rose, and the total increase was 2,023.12 dollars, yielding an average increase of 505.78 dollars. (The down day had a decline of 317.46 dollars, a large amount, and the increased volume leads to larger intraday swings than the previous day.)

Recently, regarding near-term economic indicators, especially GDP forecasts for the October–December quarter, Europe has publicly raised significant questions about the previous view of "roughly -0.1% quarter-on-quarter," and with renewed lockdowns some institutions are beginning to forecast double-digit negatives. For the United States, GDP may not look so bad, but there is a growing cautious view on consumption (including the Christmas shopping season).

In that sense, yesterday’s Conference Board U.S. Consumer Confidence Index (November) drew attention; the reported figure was 96.1, a sharp drop of 5.3 points from the previous month. The February figure, when there was no COVID-19 impact, was 132.6. With households' cash and savings rising sharply, the money that is stagnant seems to be reluctant to move toward consumption.

However, the current market appears to be ahead of itself, as if already vaccinated, and seems determined not to worry about numbers through the first to third quarters of next year. The condition for stock-price gains may be “the Biden administration and vaccines” alone.

As noted in "SIGN," the summed RSI for Japan and the United States is near its ceiling, and the Dow seems to have already reached it. Looking ahead, from this week into early next week (with some U.S. markets closed), the expectation is that it will hover at the ceiling, and a clear drop is unlikely. The U.S. market that sometimes feels the need to reach a target has achieved 30,000, and at this stage it is more likely to move into a high, well-supported range rather than a sharp fall.