Monday’s global stock rally unleashed by a 2nd round of covid vaccine hopes this time courtesy of Moderna, and which pushed the Dow and all major indexes to new record highs, fizzled on Tuesday as investors shifted focus back to the accelerated near-term spread of the virus and the creeping shutdowns which are certain to hammer the US economy. S&P futures dropped 0.5% or 20 points as New Jersey, California and Iowa imposed fresh restrictions as the number of new US cases hit a record, and threatened to worsen as the colder weather sets in. Nasdaq 100 futures were boosted by yet another reversal in the reflation trade, as well as a jump in Tesla on the prospect of the electric-car maker’s shares joining the S&P 500.
Curiously, the same 3,600 “gamma wall” level which we warned yesterday would complicate a major push higher in the S&P ahead of op-ex, is now serving as a buffer to the downside, and will limit losses. Sure enough, the Emini session low so far today has been… 3,600.