Stocks Start the Week Higher

Catch Up Quick

• Trump nominates Amy Coney Barrett as nominee to replace Ruth Bader Ginsburg

• ~3.5K U.S. firms have sued the Trump administration for "unbounded" trade war

• 57 Fortune 100 companies have collectively committed $3.3B to fight inequality

• Only 67 companies have included released earnings guidance so far in Q3 2020

• Devon Energy agreed to buy rival shale producer WPX Energy for ~$2.6B in stock

• SpaceX launched 60 more Starlink satellites for its broadband internet service

• 5 star RBC Capital Markets analyst Mark Mahaney reiterates Alibaba buy rating

• A federal judge blocked Trump's ban on new TikTok downloads

• Amazon's Prime Day mega sale is set to take place October 13-14

• Take our 15 second survey for a chance to win a $50 Amazon Gift Card

Monday Insight

• U.S. stocks climbed sharply today (S&P 500 +1.61%, Nasdaq +1.87%, Dow +1.51%) driven by positive Chinese economic data, M&A hype, and renewed hope for more incoming coronavirus stimulus— on days in which equities express high volatility on either the upside or the downside, it can be helpful for investors of all experience levels to research and keep a tab on high level drivers of the activity, aggregating an arsenal of market movers for future reference

Thought of the Day

• Market breadth indicators measure the number of stocks that have risen relative the numbers of stocks that have fallen over a period of time

• This isn't too insightful in itself, but many investment professionals look at various different types of breadth indicators

• For example, gain breadth, simply reveals the number of stocks that lead market gains

• According to recent data from The Leuthold Group, the gap between the weighting of the 5 largest & 300 smallest companies in the S&P 500 rose to a record high this past August

• This concentration of wealth, mostly in a few massive U.S. tech companies, has reached a scale significantly greater than it was before the dot-com bubble burst

• Without any math, one could conclude that Nasdaq gain breadth is currently low, since few companies have led the gains

• Historically, in markets that have risen on low gain breadth, price action is less sustainable

• All it takes is the few breadth leaders to fall and the broader index will plummet as these names weigh heavily

• For example, if antitrust regulators imposed a breakup of Facebook, the entire Nasdaq would draw down, even though this is really only pertinent to Facebook and maybe other FAANG names

• Thus, passive investing & indexing also becomes unnecessarily risky during times of low breadth, which has been confirmed by recent market volatility

The Bottom Lines

• Trading stocks solely off of technical indicators is controversial, given in this fashion your opponents on the other side of the book are almost entirely systems inclusive of computers, fiber optics and complex algorithms informed by more data than a human brain can reference

• However, monitoring these metrics can lend situational insights, especially during an environment in which many fundamentals have the potential to affect markets

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