Post election rally stalls for the second day, quantum computing and space stocks trade higher

With the post election rally stalling over the last couple of days short term focus is moving to the Economic news. In the release today, wholesale prices rose 0.2% in October, annualised rate of 2.4%. This was in line with expectations and would appear consistent with a further interest rate cut this year.

The US Indexes were mixed on Wednesday. The VIX was down 1 at 14. The main indexes were; DJIA +0.11%, S&P 500 +0.02% and Nasdaq -0.26% (Mag7 +0.03%). On an equal weighted basis (our measure) the overall market was -0.94% and is now negative over the last week. Breadth of 34% (range of 12% to 88% over the last six weeks) highlighted that there were clear winners and losers from the Election result, breadth over the last week is 43%. Volumes were strong at 11b (the average daily volume over the last year of 8b). 

One day returns as follows - equal weight basis: Mag7 +0.03% (AMZN +2.5%, TSLA +0.5%), large cap -0.06%, medium cap, -0.51%, small cap -0.95% and micro cap -1.31%. On a 1 and 2 week equal weight basis respectively; Market -0.3% and +2.8%, Mag7 +3.4% and +5.9%, Large caps +0.5% and +2.9%, Medium cap -0.1% and +4.0%, Small cap -1.1% and +4.3% and finally Micro cap -0.1% and +1.5%. 

Our risk monitor remains in favour of the larger cap stock but Small cap in particular has been very strong over the last 2w and outside of Mag7 they are the best performer. Micro caps have underperformed the market by 1.3% over the two weeks.

At a sub industry level there can be some distortion when looking at the performance by market cap band as some of these bands contain a small number of stocks. Generally the sector performance is being determined by the daily direction of the market with Bull days (>0.5%) favouring Healthcare, Consumer Cyclicals, Technology and Industrials and Bear days (>-0.5%) favouring Real Estate, Consumer Non-Cyclicals, Financials and Utilities. For a comparative map of stock performance in these sub sectors have a look in the Spotlight page.

Only two sectors were in positive territory yesterday, Utilities was +0.2%, pushed higher by Independent Power +1.9% and Electric Utilities (inc Nuclear) +0.8%. Industrial Goods +1.1% helped list Industrials, Aerospace & defence was +1.14% (space and defence stocks performed best) and Courier, Postal, Air Freight was +1.9%. Food & Retail twithin Consumer Non-Cyclicals supported the wider sector and helped it beat the market. Department stores were +1.5%, ahead of the month end retail events helping Consumer Cyclicals. Technology lagged the market yesterday for the first time in 7 days, it is the best performing sector over the last month. Fintech (-2.4%) was weak yesterday after the very strong recent run (Blockchain was -6.3%, the sub sector is now +47% over the last two weeks). Software & IT Services was the strongest part of Tech sector yesterday, with Quantum computing performing strongly. Healthcare was the worst performer and continues to lag the market since the election. This is a surprise considering the sector is a traditional beneficiaries of a more bullish market.

A notable number of 52 week highs was seen in all sectors: Exceptionally high number of 52 week highs in Consumer Cyclicals (across the sector), Financials particularly Banking & Investment Services. Industrials was strong again (across the sector including Transportation... for the second time) and Technology (Software & IT Services, Technology Equipment and FinTech).

Notable high volumes in all sector: Exceptional levels in Consumer Cyclicals (across the sector), Financials (across the sector), Industrials (across the sector) and Technology (Software & IT Services, FinTech and Technology Equipment)