I sit surrounded by 17 screens that help me visualize incoming data related to the stock market. These days, front and center, are screens on coronavirus-related stocks. Often stocks start moving faster than I can find out about the news.
My Gilead Sciences GILD alarm rang, and a quick glance showed that its stock was halted. Stock market futures showed continued buying, indicating that the news was likely good. Then futures started rocketing, and Wall Street’s fear gauge, the VIX VIX, fell as the news circulated.
The first good news was that data emerging from National Institute of Allergy and Infectious Diseases (NIAID) study of remdesivir for the treatment of coronavirus showed the antiviral had met its primary endpoint. The second good news was from the results of Gilead’s SIMPLE trial, showing patients who received a 10-day treatment of remdesivir achieved similar results compared with those taking a five-day course.
Let’s examine with the help of two charts the perfect timing of the good news from Gilead as the stock market approaches a high-risk area.
Two charts
Please click here for an annotated chart of the Dow Jones Industrial Average ETF DIA which tracks the Dow Jones Industrial Average DJIA.
Please click here for an annotated chart of the S&P 500 ETF SPY which does the same for the S&P 500 SPX.
Note the following:
• The first chart is monthly, giving investors a long-term perspective.
• The second is a five-minute chart, showing a very short-term perspective.
• The first chart shows the stock market has rallied to the bottom band of the resistance zone. This is a very high-risk area for the stock market to reverse itself to the downside.
• The second chart shows that the timing of the Gilead study release could not have been better, as it reduces the downside risk.
• The second chart shows that the stock market took off like a rocket on the Gilead news.
• The second chart shows the VUD indicator, which is the best measure of net supply and demand in real time in the stock market.
• The chart shows the VUD indicator showing solid net buying, as shown in green.
Important factors
Here are six important factors driving the stock market:
1. Investors are hiding in the large-cap tech stocks of Amazon AMZN, +2.50%, Apple AAPL, Alphabet GOOG, GOOGL, Facebook FB and Microsoft MSFT. How these stocks behave will, in large part, determine the future course of the stock market. For now, they are overbought, so investors are underestimating the risks. Please see “Investors have $5.1 trillion hiding out in the shares of five companies, which will be tested this week.”
2. New programs from the Federal Reserve to support the economy.
3. New monetary stimulus programs from the U.S. government.
4. Further progress in antivirals and vaccines….Read more at MarketWatch.
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