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Afternoon Note

Floundering From Lack Of Leadership

By Charles Payne, CEO & Principal Analyst
10/14/2020 1:35 PM

The market is floundering after starting the session fractionally higher.  For the second session in a row, there is a lack of leadership.  Most investors were expecting to key off bank earnings as a catalyst this week.  The problem is even when banks beat the street on the top and bottom lines, even by huge margins, their shares look wobbly.

With a void in leadership, the market is drifting.

One of the reasons the market has shifted lower are headlines associated with the election and stimulus saga. President Trump is pushing for more stimulus at the New York Economic Club and mentioned possibly losing the election.

Steven Mnuchin made a number of comments:

Getting something done before election is difficult

On certain issues, stimulus talks are still far apart

Message of Market

In an overall quiet session, there are pockets of explosive moves, including Energy stocks.  The sector is the best performer powered higher by Concho Resources (CXO), which is the top percentage winner in the S&P 500.  Takeover rumors are powering the stock higher.  A deal would make sense, considering there was a wave of consolidation and a grab in the Permian Basin.

Speaking of which, on their earnings call, Goldman (GS) says M&A in recent months is through the roof, with deal volume in the quarter up 5-fold from the second quarter.   The Energy sector (XLE) is forming a cup and handle, and any big news could send it to 34; although, it would need an improved global economy for a move to 38. 

XLE


Comments
Good information Mr. Payne. Do you think the election and approval/availability of a COVID-19 vaccine will be a true turning point for this market or are there other restrictions that will hinder?

Stephen Guy on 10/18/2020 12:37:35 PM
 

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