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Today looks like a strong rally but I’ve got my doubts.

At the close the Standard & Poor’s 500 was up 1.60%. The Dow Jones Industrial Average was ahead 1.34%.

The technology laden NASDAQ Composite was higher by 2.26%. The NASDAQ 100, dominated by the technology sector’s biggest stocks, was up 2.34%.

Apple (AAPL) gained 3.75% at the close. Amazon (AMZN) had climbed 2.49%. Microsoft (MSFT) advanced 2.28%. Nvidia (NVDA) rose 4.26%.

The Technology Select Sector SPDR ETF (XLK) advanced 2.39% at the close. The Financial Select Sector SPDR ETF (XLF) was up a strong but not as strong 1.08%. The Consumer Discretionary Select Sector SPDR (XLY) gained 1.37%. The Consumer Staples Select Sector SPDR ETF (XLP) rose just 0.53% at the close.

Gold was weaker on the day with the SPDR Gold Shares ETF (GLD) down 0.28% at the close. Gold itself dropped with the shiny stuff falling 0.68% for December delivery on the Comex.

So what’s it all mean?

Well, the relatively small drop in gold and the big surge in the biggest technology shares could well be a sign that investors and traders aren’t as optimistic about the economy and the market as the headline gains for the day indicate. The relatively low volume today compared to yesterday also urges a deeper look into the underlying state of fear in the market.

Here’s a quote from Bloomberg today that deserves your attention: “If I were to be unsure about a stimulus package, unsure about whether there will be a vaccine, there’s no better thing than to hide out in the megacap tech stocks because they work in an economy-closed scenario,” Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management, told Bloomberg.

In other words the big cash flowing into the Apples, Amazons, and Microsofts of the market is looking to hedge against risks in the economic, coronavirus, and political realms. And that the buying of shares of the big tech companies is taking place against a background where we’re still in a correction (or near one depending on what sector or index you’re watching) and where many hedges against risk in the out months beyond November are very expensive.

November VIX futures (on the CBOE S&P 500 Volatility Index)–which reflect the market’s expectations for volatility through the November 18 expiration– are more expensive than October, Bloomberg reports, while December futures prices have been creeping higher as traders increasingly worry about a delayed result in the November election. The same pattern appears in the currency market. Since June, currency traders have been using the yen to protect against volatility as far out as  January. And Bloomberg reported today that a JPMorgan Chase measure of swings for more than 20 global currencies–based on three-month at-the-money forward options–climbed back to its highest level since the March Bear market.

This is, no doubt about it, a very odd market. If my read of today’s action is correct, the cash flows argue in favor of using the big tech stocks as a hedge against uncertainty–despite their nose-bleed prices. It suggests that materials stocks, which would be leading the market upward if investors and traders really believed in the story of a stronger economy, will trail, as they did today, when the Materials Select Sector SPDR (XLB) gained just 0.89% at the close. And it says to closely watch traditional measures of risk and fear because, if they are based on relatively short-term prices, as the CBOE S&P 500 Volatility Index (VIX) is, then these measures may not be picking up worries in the post-November time span. The VIX, by the way, dropped 7.86% today to 26.27.