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Amid rotation talk, November’s S&P rally remains broad: At the Open

Nov. 13, 2020 8:43 AM ETS&P 500 Index (SPX), SP500, SPYSPY, XLE, XLB, XLF, XLI, XLK, XLP, XLY, KO, XLC, SP500, SPX, SX5EBy: Kim Khan, SA News Editor7 Comments
  • S&P futures (SPX) +0.9% are rising follow the decline yesterday that was fueled in part by more lockdown measures in the U.S. as COVID cases increase, mirroring the worrying trend that hit Europe earlier.

The rise in the S&P (SP500) in the last 15 minutes of trading yesterday was a promising sign that the broad-based decline Thursday was more some easing after the month’s gains, rather a shift in sentiment. And that translated into premarket gains as earnings after the bell were by and large encouraging.

There’s been a lot of talk about the return of money into the cyclicals, understandably given stocks like JPMorgan and Boeing surging more than 13% on Monday. 

And the European part of the cyclical trade narrative has been borne out. The Euro Stoxx 50 Index (SX5E) +0.3% is up about 7% this week and 16% for the month.

But in the U.S. the rally has been a lot broader than the headlines have suggested.

The S&P is up 0.8% this week and up 8.2% in November.

Cyclicals have taken the lead this month, with Energy (NYSEARCA:XLE) up 14%, Financials (NYSEARCA:XLF) up 11%, Industrials (NYSEARCA:XLI) rising 11% and Basic Materials (NYSEARCA:XLB) up 7%. 

But the megacap sectors have posted solid gains as well. Information Technology (NYSEARCA:XLK) is up 8%, Communications Services (NYSEARCA:XLC) is up 7% and Consumer Discretionary (NYSEARCA:XLY) is up nearly 6% (and that sector has the volatility of the recovery plays like department stores and cruise lines).

This morning is following the broader rally theme as well. The sectors leading in premarket are XLF +0.9%, XLY +0.9%, XLC +0.9% and XLK +0.7%

Looking at the technical picture of the SPDR S&P (NYSEARCA:SPY) +0.6%, the relative strength index is in the 60s, just below overbought territory. But it hasn’t been that high since mid-October.

This month SPY rose above its 100-day simple moving average and then its 50-day. The 100-day SMA is upward sloping, but the 50-day still looks flat.

Sector Watch

Consumer Staples (NYSEARCA:XLP) held on the best yesterday, posting the smallest decline with all 11 sectors in the red.

Today at 11 a.m. ET, Coca-Cola Company (NYSE:KO) execs will discuss the company's approach to sustainability, diversity and inclusion during a webcast. Topics will include Coca-Cola's sustainability strategy and goals, response to COVID-19 and stance on racial equity, among other topics. ESG ratings on large corporations have taken on increased significance with investors.

Coca-Cola is up 7% so far this week.

See more market-moving events at Seeking Alpha’s Catalyst Watch.

 

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