The finish line for 2020 is in sight as we have two weeks remaining in this tumultuous year. Stocks have been able to shake off the early economic impact from the pandemic shut down and rally to all time highs into year end. Today sets up as an interesting day as we have the last Fed meeting and received early indications that Capitol Hill is closing in on an approximate $900 bln stimulus package. Markets have been bumping up against resistance levels ahead of these headlines. The potential for ‘peak stimulus’ in the midst of high bullish sentiment has bears searching for a rollover. Bulls continue to point to cheap money, stimulus, and improving economic trends setting up the next leg higher for this rally.
- Trivia Question- What is the trading period that makes up The Santa Claus Rally and how often has this period produced positive returns since 1950? (Answer below)
We are not here to forecast whether or not we are at a top, but we did notice some surge patterns developing that might suggest Financial Advisors are seeking safety while retailer investors continue to chase the more volatile pharmaceutical space. This type of activity may point to a more cautious environment. The general thought process is Financial Advisors or the ‘smart money’ are playing it cautious while retail or the ‘dumb money’ is chasing volatile names and profits. These are themes that have foreshadowed the later innings of a rally in the past. This is hardly a bearish call but rather a signal for some potential near-term profit taking in a lower volume environment.
TrackStarIQ Data
Here are some highlights of research surges* this week –
RANK | TOP ETFS – BY ALL FAs (Surge Traffic) This Week | Ticker | TOP STOCKS BY RETAIL (Surge Traffic) This Week | Ticker | TOP INDUSTRIES BY ALL FAs (Surge Traffic) This Week | TOP ETF CATEGORIES BY ALL FAs (Surge Traffic) This Week |
---|---|---|---|---|---|---|
1 | Vanguard Consumer Discretionary ETF | VCR | Apartment Investment and Management | AIV | Medical Care | Long-Short |
2 | MicroSectors FANG+ Index -3X Inverse Leveraged ETN | FNGD | Arvinas Inc | ARVN | Trucking & Courier Services (No Air) | Hedge Fund |
3 | ProShares UltraShort Dow 30 | DXD | Rubius Therapeutics Inc | RUBY | Business Equipment & Supplies | Inverse Equities |
4 | ETRACS Alerian MLP Index ETN | AMUB | Prevail Therapeutics Inc | PRVL | Gold ores | Latin America Equities |
5 | WisdomTree US MidCap Dividend ETF | DON | Thunder Bridge Acquisition II Cl A | THBR | Metal Fabrication | Japan Equities |
6 | Columbia Diversified Fixed Income Allocation ETF | DIAL | Mid-Con Energy Partn | MCEP | Communications equipment, misc | Industrials Equities |
7 | First Trust Amex Biotechnology Index | FBT | Biocardia Inc | BCDA | Home health care services | Utilities Equities |
8 | Janus Henderson Short Duration Income ETF | VNLA | Concord Medical Services | CCM | Sanitary Services | Real Estate |
9 | Global X Video Games & Esports ETF | HERO | Anchiano Therapeutics Ltd ADR | ANCN | Industrial Organic Chemicals | Commodity Producers Equities |
10 | Global X SuperDividend U.S. ETF | DIV | Anpac Bio-Medical Science CO ADR | ANPC | Beverages | Volatility Hedged Equity |
11 | Vanguard Energy ETF | VDE | OncoCyte Corp | OCX | Heating equipment, except electric | Commodities |
12 | ProShares K-1 Free Crude Oil Strategy ETF | OILK | Opiant Pharmaceuticals Inc | OPNT | REIT – Diversified | Leveraged Real Estate |
13 | Direxion Daily Energy Bull 2X Shares | ERX | Solarwinds Corp | SWI | Silver | Preferred Stock/Convertible Bonds |
14 | Invesco S&P 500 Equal Weight Real Estate ETF | EWRE | Big Rock Partners Acquisition Corp | BRPA | Retail-Miscellaneous Retail | Global Real Estate |
15 | Invesco S&P 500 Pure Growth ETF | RPG | Universal Logis Hld | ULH | Motion picture and video production | Corporate Bonds |
16 | VanEck Vectors Pharmaceutical ETF | PPH | Synlogic Inc | SYBX | Custom computer programming services | Consumer Discretionary Equities |
17 | AdvisorShares Ranger Equity Bear ETF | HDGE | Cootek [Cayman] Inc | CTK | Oil & Gas Midstream | Preferred Stock/Convertible Bonds |
18 | IQ Merger Arbitrage ETF | MNA | Gaslog Partners LP | GLOP | Education & Training Services | Volatility |
19 | 3D Printing ETF | PRNT | China Liberal Education Holdings Ltd | CLEU | Laboratory apparatus and furniture | Consumer Staples Equities |
20 | Fidelity MSCI Information Technology Index ETF | FTEC | Alexion Pharm Inc | ALXN | Business services, misc | Currency |
With regard to the Financial Advisors, there was a surge in search patterns around inverse and dividend-themed ETFs. The MicroSector FANG+ 3x Inverse Leveraged ETF (FNGD) came in at #2 in Top ETFs by All Financial Advisors. Large Cap Tech was not alone as bears were interested in the ProShares UltraShort Dow 30 (DXD). In addition to research around Inverse ETFs, Financial Advisors were focused on income and dividend research that led to searches on the Wisdom Tree MidCap Dividend ETF (DON), Columbia’s Diversified Fixed Income (DIAL), and Janus’ Short Duration (VNLA). We try not to regurgitate the search list in this section but we did want to highlight these search patterns in the broader market context.
On the retail side, search patterns were far different We discussed the heavy focus on pharmaceuticals in our Sunday newsletter. We continued to see that play out as spikes in pharma share price and volume continued to capture your clients’ focus. Arvinas (ARVN), Rubius (RUBY), Prevail (PRVL), Biocardia (BCDA) are just a few names that were populating our list of Top Stocks by Retail Surge Traffic. This search context continues to suggest your clients are looking for big winners with a potential to provide large returns.
The juxtaposition in Surge Traffic between Financial Advisors and clients was a theme that gave us some pause given the market crossroads. We are not looking to ring the alarm bell but sentiment can be a powerful indicator for market direction. We will be curious to see how the market reacts post-Fed and we will provide an update to the retail search patterns on Friday.
Trivia Answer- The Santa Claus rally is the final five trading sessions of the year and the first two trading sessions in the following year. It has produced positive returns in the S&P in 55 of the 70 years between 1950-2020. On average the S&P rose 1.33% over that period. Returns have been muted as of late with an average return of 0.38% over the past 10 years.