A New Bull Market?

By Alex Eule  |  Wednesday, August 3

Risk On. Stocks had a throwback feel today, with pandemic favorites soaring. Covid vaccine maker Moderna jumped 16%, leading all gainers in the S&P 500. E-commerce and fintech names also jumped, led by Block, Shopify, and PayPal, which were all up at least 9%. Even beleaguered Peloton Interactive had a strong day, up 6.3%. 

Like the early days of the pandemic, energy prices and related stocks were in decline. The price of crude oil dropped 4%, to $90.66 a barrel, its lowest settling value since Feb. 10. Energy was the only S&P 500 sector falling on the day, down 2.9%. 

The return to growth stocks reflected another risk-on day from investors, who have now helped drive the S&P 500 up 13% since its mid June low. The tech-heavy Nasdaq Composite is up 19% since that period. That means another one percentage point move would put the Nasdaq in a bull market. That didn't seem very likely a couple months ago. That being said, a bull market doesn't signal the end of a longer bear market. Confusing, I know. But from 2000 to 2002, the Nasdaq had multiple 20% moves inside its longer decline. It's still possible we're in the middle of a bear-market bounce.

Still, the market may be moving in the right direction. Jonathan Krinsky at BTIG says to watch for 4,231 on the S&P 500, just 1.8% above the large-cap index's close of 4,155 today. That 4,231 figure would mean the index had recovered 50% of its decline since the slide started on Jan. 4. Here's more from Krinsky: 

Our view remains that we have yet to see the final low for this bear market, but there are a few key levels we are watching to potentially change that view. The 50% retracement level of the entire decline is 4231. In nearly every bear market, once it declines 20% or more on a closing basis, it rarely if ever exceeds the 50% retracement unless the final low has been made. ... it’s hard to call July anything but a clear victory for the bulls, but August is likely the true tell.

DJIA: +1.29% to 32,812.50
S&P 500: +1.56% to 4,155.17
Nasdaq: +2.59% to 12,668.16

The Hot Stock: Moderna +16.0%
The Biggest Loser: SolarEdge Technologies -19.1%

Best Sector: Technology +2.7%
Worst Sector: Energy -2.9%