Stock Market Update: Monday, October 5, 2020

The stock market closed higher following a number of positive developments — and more in Monday’s WealthPress stock market update. Most prominently, reports indicate President Donald Trump is doing better and will be discharged this evening, although doctors offered conflicting signals about how he is faring with the illness. 

Fresh hopes for a stimulus deal also fueled bullish sentiment following a meeting between House Speaker Nancy Pelosi, D-Calif., and Treasury Secretary Steven Mnuchin. Both sides plan to speak again Tuesday as they craft a relief bill. 

Stock Market Update 

The Russell 2000 zoomed 2.8% after jumping to an afternoon high of 1,582.

The Nasdaq surged 2.3% following the late-day push to 11,335.

The S&P 500 jumped 1.8% with the peak reaching 3,409.

The Dow rallied 1.7% after testing a final hour high of 28,162.

Energy was the strongest sector strength after rising 3% while Technology and Healthcare rose 2.2% and 2.1%. There was no sector weakness.

Stock Market Movers

Shares of AMC Entertainment Holdings, Inc. (NYSE: AMC) sank 11% following the announcement from Cineworld, parent company of Regal, that it will temporarily suspend operations at all of its 536 Regal theatres in the U.S., as of October 8. 

With major U.S. markets, mainly New York, remaining closed and without guidance on reopening timing, studios have been reluctant to release new films. Without new releases, Cineworld said it cannot provide customers in both the U.S. and U.K. with the breadth of commercial films necessary for them to consider coming back to theaters against the backdrop of coronavirus.

Stock Market Outlook 

A closer look at the VIX chart below shows the index has traded between its 50-day and 200-day moving averages for 17 trading sessions. Once this trading range breaks to the upside or downside, the next major stock market trend should come into play. 

Specifically, if the VIX clears and holds the 30 level along with the 200-day moving average, the major indexes will likely test and break the September lows. If the VIX can recover the 25 level and the 50-day moving average, then the market could retest all-time peaks.

The third-quarter earnings season won’t come into play until next week, so the likelihood of choppy action and trading ranges remain in play.

Global Economy

European markets closed higher on renewed optimism for a Brexit solution following talks between UK Prime Minister Boris Johnson and European Union Commission President Ursula Von der Leyen with both sides agreeing to extend talks ahead of the October 15th EU summit.

The Belgium20 soared 1.4% and Germany’s DAX 30 rose 1.1%. France’s CAC 40 advanced 1% and the Stoxx 600 added 0.8%. UK’s FTSE 100 was higher by 0.7%.

Asian markets settled mostly higher following upbeat reports of Trump’s health.

Australia’s S&P/ASX 200 surged 2.6% while South Korea’s Kospi and Hong Kong’s Hang Seng rallied 1.3%. Japan’s Nikkei jumped 1.2%. China’s Shanghai slipped 0.2%.

Stock Market Sentiment

The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the second straight session after plunging to a late-day low of $159.52. Prior and upper support from late August at $160-$159.50 was breached and failed to hold. A close below the latter would suggest additional weakness towards $158.50-$158 and the 200-day moving average.

Lowered resistance is at $160.50-$161 followed by $162.50-$163.

Volatility Index

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the fifth straight sessions with the opening high hitting 29.69. Lower resistance at 29.50-30 was cleared but held. A close above the latter and the 200-day moving average would be a bearish signal for the market with upside risk towards 32-32.50.

Support remains at 27-26.50 followed by 25.50-25 and the 50-day moving average.

Stock Market Analysis

The iShares Russell Growth 1000 ETF (NYSEArca: IWF) rebounded to close higher for the third time in four sessions with the second-half top reaching $219.55. Near-term and lower resistance at $219.50-$220 was cleared but held. A move above the latter would be a bullish signal for a retest towards $222-$222.50.

Support is at $218.50-$218 followed by $216.50-$216.

Sector

The Dow Jones Transportation Average ($TRAN) was up for the second straight session with the intraday high reaching 11,510. Lower resistance at 11,500-11,600 was cleared but held. A close above the latter would indicate a retest towards 11,700-11,800 and fresh all-time highs.

Rising support at 11,400-11,300 followed by 11,100-11,000 and the 50-day moving average.

RSI (relative strength index) is in an uptrend with key resistance at 60 getting cleared and holding. Continued closes above this level would signal additional strength towards 65-70. Support is at 55-50.

Check back each day for the most important news and numbers here in the WealthPress stock market update.