Rotation Continuation?

Already underway, rotation into cyclical and value stocks really got rolling as the energy sector came alive along with the Russell 2000 Index (IWM ) on the November 9 Pfizer Covid-19 vaccine news. With a seasonal tailwind, the Market Review takes a look and then offers a speculative put sale idea in the hot EV sector with Hyliion Holdings Corp. (HYLN).

S&P 500 Index (SPX) 3638.35 added 80.81 points or +2.27% last week making new closing highs on both Tuesday and Friday. However, the near term closing objective remains the November 9 intraday high at 3645.99, within easy reach just 7.64 points away since seasonal strength should continue well into December. On any unexpected pullback expect support near 3550 and then around the 50-day Moving Average at 3446.36.

iShares Russell 2000 ETF (IWM) 184.37, up 6.87 points or +3.87 last week and now tentatively labeled the new "decider," a the role previously played by the Invesco QQQ Trust (QQQ) before Pfizer's vaccine news.

Invesco QQQ Trust (QQQ), 299.01 advanced 8.63 points or +2.97% closing just short of the November 9 intra-day high of 299.14 coming in second behind IWM. However, the September 2 intra-day high at 303.50 and closing high at 302.76 remain the levels need to reach to declare new highs. Should profit-taking in big cap growth stocks continue, it could continue lagging. While well above support at the upward sloping 50-day Moving Average at 283.18.

CBOE Volatility Index® (VIX) 20.84 dropped 2.86 points or -12.07% last week. Our similar IVolatility Implied Volatility Index Mean, IVXM using four at-the-money options for each expiration period along with our proprietary technique that includes the delta and vega of each option, lost 2.11 points or -10.98% ending at 17.11  well into the bullish zone.

The IVXM and SPX charts.


VIX Futures Premium

This next chart shows as our calculation of Larry McMillan’s day-weighted average between the first and second-month futures contracts as of last Friday.

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Disclaimer: is not a registered investment adviser and does not offer personalized advice specific to the needs and risk profiles of its readers.Nothing contained in this letter ...

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