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David Becker

US stocks moved lower on Monday, driven by a decline in Energy. Crude oil prices dropped sharply declining more than 4.5% as concerns over a new stimulus package resurfaced. All sectors in the S&P 500 index were lower, driven down by materials and energy shares, consumer staples were the best performing sector in the S&P 500 index. The VIX volatility index surged, while the dollar gained traction benefiting from a safe-haven bid. Gold prices moved lower as the dollar rose despite declines in US yields. Nikola founder Trevor Milton stepped down as executive chairman in the wake of the fraud allegations from short-sellers. The Dow Industrial average along with the  S&P 500 appears to be heading to support near their 200-day moving average lines. The Nasdaq appears to have moved lower after surging in August which now puts most of the indices in lockstep for the year. The death on Friday of associate Supreme Court Justice Ruth Bader Ginsburg generated additional volatility in the market.

The VIX Rises but Fails to Break Out

Despite the decline in stock prices, the VIX volatility index failed to break out. The VIX, which measures the “at the money” strike prices on the S&P 500 index. The VIX surged to 31, the highest its seen since early September but the VIX failed to surpass its 200-day moving average seen near 29.10. There now seems to be an election risk that is getting priced into the market. The difference between volatility between the end of October and the middle of November is continuing to widen.

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COVID Continues to Spread

The UK and the US reported that COVID continues to spread and is gaining traction. More than 200K deaths have been reported in the US, as the CDC continues to alter its guidance. The UK is also seeing an uptick in cases as indoor activities begin to pick up. The UK and EU announced there could be another lockdown.

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