Is The 200-Day Moving Average Important?

Tale of the Tape

Good evening people of earth. 

Stocks were mixed. The major indices barely finished green. 

Utilities were the strongest sector, $XLU +1.12%. Energy, consumer discretionary, and healthcare were negative. 

Boeing landed to a 5-month low. $RAD reported bad earnings. 

Tesla gained 2%. Peloton and Zoom both lost 7%.

Novavax initiated its Phase 3 trial. See more below.

Here are the closing prints:

S&P 5003,246+0.30%
Russell 20001,451+0.02%
Dow Jones26,815+0.20%

Stocktwits After-Hours

Today on After Hours:

Volatile Markets
SEC Looks Into SPACs
Tech Executives To Testify

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Long-Term Trends 

Is the 200-day moving average important? Sometimes it is, sometimes it isn’t.

Some market participants use the average to assess the “long-term trend.” Fidelity says this:

A longer moving average (such as a 200-day MA) can serve as a valuable smoothing device when you are trying to assess long-term trends.

Others could care less. Here’s Josh Brown, advisor at Ritholtz Wealth Management:

Talk of the S&P 500 bumping up against its 200-day moving average creates the impression that this overlay represents some sort of meaningful barrier or obstacle to the stock market. It does not. The 200-day moving average is neither wall, nor fence, nor physical barrier. It’s just an average price at which the index has closed over the last 200 sessions, roughly equal to 10 months worth of activity. 

Does the 200-day matter? Nobody knows, time will tell.

3 of the 4 major indices are above the moving average. The small-cap Russell 2000 is the only index below. 

Here are the daily charts with the 200-MA in blue. 

Russell 2000 $IWM

S&P 500 $SPY

Nasdaq 100 $QQQ

Dow Jones Industrial Average $DIA 

Novavax COVID Vaccine Study

Novavax plans to enroll 10,000 individuals for its COVID vaccine Phase 3 efficacy trial. 

President of Research and Development at Novavax, M.D Gregory M. Glenn, said this:

With a high level of SARS-CoV-2 transmission observed and expected to continue in the UK, we are optimistic that this pivotal Phase 3 clinical trial will enroll quickly and provide a near-term view of NVX-CoV2373’s efficacy.

$NVAX was up 6% after hours.

Here’s the press release.

Bad Banks   

Australia’s second largest bank, Westpac Banking Corp, will pay $920M in fines for money laundering and child trafficking.

Westpac’s failure to monitor 19.5 million transfers resulted in the accidental support of child trafficking in Asia.

Westpac CEO Peter King commented: 

We are committed to fixing the issues to ensure that these mistakes do not happen again. We have also closed down relevant products and reported all relevant historical transactions.

Meanwhile, JPMorgan Chase faces $1B in charges for allegations of tampering with securities and futures markets. 

Here’s the Wall Street Journal with more on JPMorgan and Westpac.  

Earnings Round-Up

Darden Restaurants reported earnings this morning. Net sales fell by 28% with same-store sales stumbling 39%.

Here are the numbers:

EPS: $0.28 vs $0.05 est.
Revenue: $1.53B vs $1.56B est.

$DRI was up 8% today.

Costco reported better than expected earnings after the close. The company saw e-commerce sales increase 91.3%.

Here are the numbers:

EPS: $3.13 vs $2.71 est.
Revenue: $53.38B +12.4% YoY

$COST was down 2% after hours. See the press release here.

Vail Resorts
reported earnings after the close.

Here are the numbers:

EPS: ($3.82) vs ($3.37) est. 
Revenue: $77.21M -68.4% YoY

Vail Resorts CEO Robert Katz said this on the poor results:

Our results for the full year were negatively impacted by COVID-19 and the resulting closure of our North American destination mountain resorts and regional ski areas beginning on March 15, 2020 for the safety of our guests, employees and resort communities.

The upcoming 2020/21 ski season is a go, but restrictions are in place:

On August 27, 2020, we announced an operating plan that we believe will enable us to operate safely and consistently across our 34 North American ski resorts throughout the season, including the implementation of a reservation system for our guests that gives preference to our pass holders, limitations on lift ticket sales, limitations on our dining facilities and other changes to our operations.

$MTN was up 2% after hours. See the press release here.

Panic With Friends

Stocktwits’ co-founder, Howard Lindzon interviews Benchmark Capital’s Chetan Puttagunta on the latest episode of Panic With Friends. 

The two riff on the future of open source software.

Here’s a link to the episode.

Links That Don’t Suck

🎧 Out of Office: Goldman Sachs CEO David Solomon

🏊‍♀️ The Airbnb for Private California Swimming Pools is Booming

🐐 Sneaker Resale Platform Goat Group Raises $100 Million

👨‍⚕️ Blue Health Insurers Reach Tentative Antitrust Settlement for $2.7 Billion

🍦 The Lakers Filing A Report To The NBA Bitching About Bron Bron NOT Shooting Enough Free Throws Is The Softest Move in The History of Sports

📱 ‘Fortnite’ Maker, Spotify Form Advocacy Group to Push for App Store Changes

💰 SPACs Have Raised More in 2020 Than the Last 10 Years Combined