COVID-19 UPDATE: Ex-CA, COVID-19 has been falling in USA for past 11 days. Congress agrees on $900 billion stimulus, good news and supportive of continued epicenter rally.

Click HERE to access the FSInsight COVID-19 Daily Chartbook.

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REMINDER: We are hosting another webinar with Tom DeMark of DeMark Analytics. The last webinar with Tom DeMark on 3/24/2020 (for ~1,500 that tuned in), it was a doozy.  Tom DeMark has his proprietary systematic models where 9s and 13s are key turning points.

Details and Specifics
Date: Monday, December 21, 2020
Time: 3:00 PM Eastern Time
Duration: 60 minutes (including live Q&A)

Agenda
– Discuss DeMark’s current Market Outlook; are we approaching a Market Top?
– Review of analytics required to make stock market bottom call earlier this year. See our March 24, 2020 Webinar with DeMark where he called the Market Bottom. Access it here.
– Review of Bitcoin market since inception.
– Discuss and highlight the daily price activity and indicator interaction required to identify the precise days of prior Bitcoin tops and bottoms.

You need to register to tune in
Registration link –> Webinar registration link

Contact our sales team if you have questions.
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STRATEGY: COVID has been rolling over in the past 11 days ex-CA… Both the rollout of vaccines and the “expected to be passed” relief package benefit the “Epicenter” stocks
For the next two weeks, we are going to be publishing on a shortened holiday schedule:
Week of 12/20…
Monday 12/21
Tuesday 12/22
Wednesday 12/23

Week of 12/27…
Monday 12/28
Tuesday 12/28
Wednesday 12/30


Sunday evening, it looks like Washington finally got a relief package passed.  The total package is $900 billion and is expected to be passed within the next few days.  Among the more notable elements:

– a stimulus check is $600 per person, including adults and children
– up to $2,400 per family

This is a badly needed fiscal relief.  With the US in the midst of Wave 3 and many soft lockdowns underway, the economic hardship is devastating.  So I am personally glad to see Washington do the right thing. 

https://www.washingtonpost.com/us-policy/2020/12/20/stimulus-congress/


This is welcome news and a more reason we believe stocks can finish strong in 2020.  And as mentioned in the prior commentaries, the December seasonals are particularly strong in the second part of the month.  The direct payments are going to benefit companies which benefit from consumer spending.  This is more true in this package given the $600 is for every adult and child:

– to me, this should be strengthening the relative performance of epicenter stocks
– see the list of stocks below.


For the past 11 days, excluding CA, COVID-19 has been down vs 7D ago…
COVID-19 is beginning to sustainably rollover in the US.  Wave 3, in other words, looks like it is rolling over.  We are showing 7D delta below, both show 7D delta is flat/down but ex-CA, we can see that 7D delta has been negative for ~11 days, or nearly 2 weeks.  So I think it is looking like Wave 3 is tentatively rolling over.  It is tentative, because of the holiday season. So like there was a post-Thanksgiving surge, there might be a post-Christmas/New Years surge.

Source: COVID-19 Tracking Project and Fundstrat

Source: COVID-19 Tracking Project and Fundstrat


Vaccines coming, but while we wait… take Vitamin D
Fortunately, the vaccines are finally being delivered and dosed by US states (see Point #3) and about 125,000 Americans have already received a vaccine.  We could start seeing reduced infections in the US in short order — we don’t need to reach herd immunity for infections to slow.  The combination of vaccinated + recovered is going to rapidly reduce the vulnerable cohort.

But the majority of us will need to wait for a vaccine.  And the natural question is what can we do to stay safe.  Obviously, practicing all the effective mitigation measures are key (i.e., keep hands clean and away from the face, etc.).  But Vitamin D is increasingly looking very effective.  Below is another metastudy article on healthline.org and this particular study found 80% of COVID-19 patients were Vitamin D deficient.

– sunlight is the best source of Vitamin D, but winter makes it tougher
– supplements are the only real source otherwise
– it is actually kind of hard to get enough Vitamin D from food (need to really eat consistently)

https://www.healthline.com/health-news/new-study-found-80-percent-of-covid-19-patients-were-vitamin-d-deficient



Clarifying our 2021 outlook… markets should peak sometime in Feb-April at 3,950 to 4,050
We hope you can tune into our webinar with Tom DeMark on Monday.  He will be sharing his tactical outlook for markets, both equities and bitcoin.  And in some ways, we expect Tom D to speak about a potential near-term top for equities coming in the next 8 weeks.  This is consistent with our 2021 outlook for stocks.

– we believe stocks will post a short-term peak between Feb-April 2021, consistent with other prior bull market starts (1982 and 2009)
– and this suggests the further upside prior to the peak is 5%-7%, or roughly S&P 500 3,950-4,050

Source: Fundstrat 




STRATEGY: 67 stocks (*) in the ‘Top 3’ sectors…
Our data science team, led by tireless Ken, has put together the trifecta list of stocks, coming from the ‘top 3’ sectors: Discretionary, Industrials and Energy.  These are stocks that there is consensus between myself, Rauscher and Sluymer.

Consumer Discretionary (30 stocks)
AN, GM, F, HOG, GRMN, LEG, TPX, PHM, TOL, NWL, HAS, MAT, PII, MGM, HLT, MAR, NCLH, RCL, WH, WYND, SIX, DRI, SBUX, FL, GPS, LB, CRI, VFC, GPC, BBY

Industrials (28 stocks)
AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, MMM, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL

Energy  (9 stocks)
HP, NOV, SLB, EOG, PXD, HFC, MPC, PSX, XEC

Source: Fundstrat  

(*) The 67 stock ideas are the subset of the “Epicenter” Trifecta stock list we published on December 11th, 2020. To view the full list of stock idea, click here. Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile.

ADDENDUM: We are attaching the stock lists for our 3 portfolios:
We get several requests to give the updated list for our stock portfolios.  We are including the links here:

– Granny Shots  –>       core stocks, based on 6 thematic/tactical portfolios
– Trifecta epicenter  –> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Sluymer (Technicals)
– Biden vs Trump  –>   based on correlation to either candidate odds

Granny Shots:
Full stock list here –> Click here
Tickers: AAPL, AMZN, AXP, BF.B, CSCO, EBAY, GOOG, GRMN, GWW, INTC, KLAC, LEN, LOW, MNST, MSFT, MXIM, NVDA, OMC, PM, PYPL, QCOM, TSLA, XLNX

Trifecta Epicenter (*):
Full stock list here –> Click here
Tickers: AN, GM, F, HOG, GRMN, LEG, TPX, PHM, TOL, NWL, HAS, MAT, PII, MGM, HLT, MAR, NCLH, RCL, WH, WYND, SIX, DRI, SBUX, FL, GPS, LB, CRI, VFC, GPC, BBY, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, SBNY, NYCB, MTG, AGNC, EVR, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, MMM, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, HP, NOV, SLB, EOG, PXD, HFC, MPC, PSX, XEC, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, STOR, HIW, CPT, UDR, KIM, NNN, VNO, JBGS, RYN

Biden White House vs. Trump White House:
Full stock list here –> Click here

(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile.

POINT 1: Daily cases 183,694, +610 vs 7D ago.  Ex-CA, daily cases down vs 7D ago for ~11 days
The latest COVID-19 daily cases came in at 183,694, up +610 vs 7D ago. 
– ex-CA, the 7D delta has been falling for ~11 days now (see below)

Wave 3, in other words, is essentially ending for the US, except for CA

Source: COVID-19 Tracking Project  and Fundstrat


7D delta at +610 — EX-CA, daily cases are rolling over…
Again, the daily change vs 7D ago, in our view, is the leading indicator as it is what influences the 7D moving average. 

– ex-CA, daily cases are indeed rolling over in the US for the past 11 days

Source: COVID-19 Tracking and Fundstrat  



CA remains the state with the highest daily count in cases and also among the biggest 7D jump in cases. 

 

Source: COVID-19 Tracking and Fundstrat  

Source: COVID-19 Tracking and Fundstrat  

POINT 2: Wave 3 rolling over? County-level data shows % of US falling cases 10 week high.
The percentage of the US with falling cases (7D delta and a 14-day smoothing) is at 38% the highest level since early October.  As we highlight below, it looks like there is a good possibility that Wave 3 has peaked in the US.  But as we have cautioned since Thanksgiving, this could be a temporary respite, given the high levels of social gathering taking place during the holidays.

– but even with the Thanksgiving surge (see the dip in late Nov), the US is still overall in a positive trend

Source: Johns Hopkins and Fundstrat



But the situation in CA is pretty serious.  ICU availability is running out in CA, as reported by the Los Angeles Times below.  What makes CA difficult to understand is that this state has implemented among the strictest lockdowns and also mandates masks.  So the fact that COVID-19 is so widespread is very surprising.

https://www.latimes.com/california/story/2020-12-17/southern-california-out-of-icu-beds-amid-covid-19-surge




POINT 3: The first doses of vaccines are being delivered to US States…
Vaccines are finally being delivered and administered in the US, both from Pfizer and now from Moderna (this coming week).  For much of this pandemic, the vaccine was a mere ‘promise’ or ‘future event’ but now as the vaccines are finally getting delivered and administered by the states. 

We don’t know exactly how many doses need to be administered for the US to achieve herd immunity (Youyang Gang est. it is 100 million).  But each dose administered is a big deal — after all, the combination of:

+ Americans vaccinated
+ Americans recovered from COVID-19

leads to a contraction in the vulnerable cohort — thus, as vaccines get dosed, we should see begin to see a reduction in the level of US infections.  We don’t have to wait until 100 million Americans are dosed.

Each state is providing varying levels of disclosure.  For instance, NY state is reporting that it received 170,000 doses this week and will receive 346,000 next week (Moderna), totaling 500,000, or enough for 250,000 Americans.

Source: NY State Dept of Health




Similarly, FL has vaccinated 40,037, or which only 4,083 are over age 65.  Thus, the initial doses seem aimed at healthcare workers.

Source: FL State Dept of Health



Michigan has very few vaccinated.

Source: Michigan State Dept of Health




The NY Times has compiled some data and that state level data is below.  According to this data, Puerto Rico has administered more doses than many US states.

Source: NY Times