The major indexes aren’t showing much of a move today even on the news that a new coronavirus stimulus/relief bill is like to pass today (along with the massive fiscal 2021 spending bill for the rest of the government.) I think a good part of that lack of reaction comes since the market has been assuming a stimulus bill would pass for days if not weeks and the actual bill is priced in to a great degree.
At the close the Standard & Poor’s 500 was off 0.39%; the Dow Jones Industrial Average was higher by a meagre 0.12%; the NASDAQ Composite lost a similarly small 0.10%. The Russell 2000 small cap index tacked on 0.02% and the iShares MSCI Emerging Markets ETF (EEM0 lost a significant 1.47%.
That isn’t to say that there weren’t big moves to the upside of the sort that I expect could be the order of the day during the low volume trading days around the Christmas and New Year’s holidays. In many years bullish traders try to use the low trading volumes during these days to generate moves to the upside.
If today is any indicator of things to come, I’d watch biotech stocks in the holiday period, especially shares of companies focused on genetic therapies. CRISPR Therapeutics (CRSP), for example, gained 12.27%. Even Sangamo Therapeutics (SGMO), which uses a different gene editing technology than the CRISPR companies, was up 5.38% on the day. (Sangamo is a member of my Jubak Picks Portfolio.) The genetics therapy sector got very positive news out of this month’s biotech conferences and there’s tremendous momentum in these stocks right now. They’re exactly the kind of play that traders interested in generating profitable runs during the holidays focus on. (I wouldn’t ignore larger biotechs either. Arcadia Pharmaceuticals (ACAD) and Ionis Pharamceuticals (IONS), for example, wee up 2.61% and 1.86% on the day, respectively. Those stocks have been running strong lately. And in the holiday market momentum begets more momentum.)
Those gains, however, were dwarfed by those in what I’d call the SPAC universe. Special Purpose Acquisition Vehicles, whether they’ve found an investment candidate to buy and take public or not, burned up the season.One I’ve written about, and owned and then sold, QuantumSpace (QS) gained another 28.71% today. GIK Capital 3 (GIK) was up 13.59%. QuantumSpace is result of a reverse merger with SPAC Kensington Acquisition and is working on a solid state lithium batter for production in 2023 or 2024. GIK Capital has signed an agreement for a reserve merger with Lightning eMotors, an electric truck maker, that would take that company public. C3.AI (AI), a recent artificial intelligence IPO, was up 16.93% today. I’d expect continued action on those names and the SPAC, IPO themes.Goldman Sachs (GS) climbed 6.13%. JPMorgan Chase (JPM) gained 3.75% and Bank of America (BAC) was up 3.73%. To round out the big banks, Citigroup (C) was up 3.67% and Wells Fargo (WFC) gained 1.86%. (Citigroup is a member of my Dividend Portfolio.)
The market didn’t totally ignore its favorite big technology plays. Microsoft (MSFT) gained 1.83% and Apple (AAPL) picked up 1.24%. But the speculative money was more involved elsewhere.
The recent favorites of the post-vaccine economic recovery actually fell today with American Airlines (AAL) down 2.48%; MGM Resorts International (MGM) down 3.73%) and Six Flags (SIZX) off 2.51%.
The one somewhat discordant move on the day that bears watching is that the VIX, the CBOE S&P 500 Volatility Index, frequently dubbed the “fear index”, climbed 16.78% to 25.19. Some investors and traders sought to hedge their positions against volatility in the market even as speculative stocks soared.