The put/call ratio and volatility levels have reversed from last week and are more bullish. The stock market continues to be fragmented and it still needs a pullback to its 200-day moving average. I expect things to remain choppy in the near term. I’ve picked out two short-term pullbacks to trade in light of the current market situation — and more in our stock market recap.
Stock Market Recap
In Monday’s stock market recap, global stocks are higher despite rising COVID-19 cases and big economic reports coming this week.
Expect to see more volatility in the next few weeks as there are less participants in the market. Lack of market participants, or liquidity, increases volatility. We have a busy week for economic data and could see the market move sharply in response to any surprises. The biggest report of the week is the gross domestic product report scheduled for Thursday.
Investors should be cautious with the Health Care, Utilities and Consumer Staples sectors. The best sectors to be in right now are the Materials, Industrials and Financials sectors.
Roger’s Radar: Top 2 Pullbacks to Start the Week
Lennar Corp. (NYSE: LEN) primarily sells single-family attached and detached homes and residential land. This homebuilder has benefitted from this year’s real estate boom. The stock recently pulled back from a swing high and could bounce back to test new levels.
The second stock on my radar is one I’ve mentioned before… The company fared well as people increased outdoor activities during the summer. People are also buying more athletic clothes and we could see this sporting goods company continue to do well if the work-from-home environment persists.
In Monday’s video, you’ll discover whether markets are set to rise or fall this week… what internals are telling us about the current pullback… if volatility is reverting back to normal or trading higher… which sectors I’m focused on… which Federal Reserve report we need to pay attention to… and which way the long bond is headed.
Check back each morning for Roger’s Radar and the most important news and numbers in the WealthPress stock market recap.