Amazon’s Prime Day, potentially the biggest gift buying period of 2020, is running into intensified retail competition.

Kohl’s, J.C. Penney, Walmart, Target and Bed, Bath & Beyond are among those retailers triggering huge savings, new products and conveniences like contactless curbside pickups, and speedy deliveries, either in tandem with the Amazon promotion or a few days ahead, all to encourage consumers to get some holiday shopping done early, and distract them from the savings lure of Prime Day.

They’re also reminding consumers about the safety precautions being undertaken to reduce the risk of getting infected by the coronavirus. This year, consumers are most concerned about contracting the virus while inside stores. But they are also worried that retailers will run out of the gifts they want to buy most, since many retailers have bought conservatively for the fourth quarter, and that they won’t get their gift purchases delivered on time for the holidays.

Mostly retailers are promoting decorative home, cozy and comfortable casual clothes and accessories; home office supplies, home entertainment, kitchen-related products, electronics, games and computer equipment because of the lifestyle changes as a consequence of COVID-19. While showcasing their discounted items, retailers are reminding consumers of the safety precautions they’ve installed to make their stores safe to shop.

Due to the pandemic, Amazon this year reset Prime Day to Tuesday and Wednesday this week, as opposed to July, when it has been staged since 2015. It’s for Amazon Prime members only. Due to the delay closer to Christmas and the profound and continuing shift toward online spending, versus spending at brick-and-mortar stores, Prime Day is expected to generate robust double-digit growth this year. It’s been a key impetus to the earliest-ever onset of holiday gift promoting across the retail industry. In recent years, the holiday push for many

This column assumes that ETFs are the primary investment tool for the reader.

Please see my weekly market summation for a review of the macro-economic environment and general macro-level market trends.

Investment thesis: the macro-averages are now in a bullish posture; it’s a good time to take a new position. But be careful; defensive sectors are starting to rise, indicating traders are a bit more cautious.

Let’s start by looking at last week’s market activity, beginning with the treasury market:

TLT 5-day

The treasury market moved lower on Monday and then traded sideways for the rest of the week. Volatility was higher on late Tuesday and Wednesday as the market digested the whipsaw activity regarding additional fiscal measures. Also note the sharp sell-off and subsequent rally on Friday, likely due to additional fiscal talk.

SPY 5-day

SPY trended higher for the entire week as shown by the central tendency line in blue. t took the index an entire day to recover from Tuesday’s sell-off, but it did recover.

IWM 5-minute

I noted in my weekly round-up that smaller-caps led the market higher this week. Notice that IWM had a very strong move higher earlier in the week. This explains why small caps did so well last week.

Let’s pull the lens back to the 2-week time frame:

IEF 2-week

During the last two weeks, the treasury market has clearly trended lower, as shown by the 200-minute EMA (in magenta). The ETF has gapped lower twice and then consolidated sideways.

QQQ 2-week

While larger caps are higher, their respective charts are messier. QQQ – which has led the markets higher for most of the post-lockdown rally – is struggling. It’s also been prone to sharper, higher-volume sell-offs.

IJH 2-week

In contrast, smaller caps have stronger charts. Mid-caps have a solid uptrend

By Hideyuki Sano

TOKYO (Reuters) – The dollar was softer against riskier currencies on Tuesday on rising optimism that U.S. lawmakers could agree on new stimulus to blunt the economic impact of the coronavirus.

Risk appetite also improved after U.S. President Donald Trump left the hospital and returned to the White House following treatment for COVID-19, a development viewed as reducing political uncertainties in the near term.

“I think hopes of U.S. stimulus are the main driving force,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“As for Trump’s discharge, the impact is not clear-cut but it is seen as positive for risk environment to the extent that there are less worries about the White House getting caught in complete chaos and unable to make decisions,” he said.

The euro traded at $1.1792 <EUR=>, following a gain of 0.58% on Monday.

The pound changed hands at $1.2990 <GBP=D4>, tackling its resistance around $1.30, despite concerns about a no-deal Brexit.

The dollar advanced on the safe-haven yen to 105.66 yen <JPY=>, staying near its highest levels in three weeks.

The dollar’s index against a basket of six major currencies <=USD> dropped to 93.381, touching its lowest level in two weeks.

U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke by phone for about an hour on Monday on coronavirus economic relief and were preparing to talk again Tuesday, continuing their recent flurry of activity working towards a deal on legislation.

White House Chief of Staff Mark Meadows said there is still potential for an agreement among lawmakers in Washington on more economic relief, and that Trump is committed to getting the deal done.

However, renewed efforts in Congress to reach an agreement on relief funds for the pandemic-hit economy has been complicated by the spread of the coronavirus

We believe there may be a good opportunity with Altria stock (NYSE: MO) at the present time. MO trades at $39 currently and is in fact down 16% so far this year. It traded at a pre-Covid high of close to $44 in February, and is still 11% below that level now. MO stock has gained 33% from the low of $29 seen in March 2020, less than the S&P 500 which is up 50% from its March lows. MO stock has underperformed the broader market because the drop in the stock when the crisis hit was less than the market, as it belongs to the defensive sector of tobacco. That said, with the lockdowns being lifted, supply constraints are likely to ease leading to higher volume sold. Also, the expectations of rising sale of IQOS e-cigarettes in the US is likely to boost revenues and margins. This could take the stock to $48 – well beyond its February peak – reflecting a potential upside of more than 20%. Our conclusion is based on our detailed comparative analysis on Altria stock performance during the current crisis with that during the 2008 recession in our interactive dashboard.

2020 Coronavirus Crisis

Timeline for 2020 Crisis So Far:

  • 12/12/2019:  Coronavirus cases first reported in China
  • 1/31/2020:  WHO declares a global health emergency.
  • 2/19/2020:  Signs of effective containment in China and hopes of monetary easing by major central banks helps S&P 500 reach a record high
  • 3/23/2020:  S&P 500 drops 34% from the peak level seen on Feb 19, as COVID-19 cases accelerate outside China. Doesn’t help that oil prices crash in mid-March amid Saudi-led price war
  • Since 3/24/2020: S&P 500 recovers 50% from the lows seen on Mar 23, as the Fed’s multi-billion dollar stimulus package suppresses near-term survival anxiety and infuses liquidity

We believe there may be a good opportunity with Altria stock (NYSE: MO) at the present time. MO trades at $39 currently and is in fact down 16% so far this year. It traded at a pre-Covid high of close to $44 in February, and is still 11% below that level now. MO stock has gained 33% from the low of $29 seen in March 2020, less than the S&P 500 which is up 50% from its March lows. MO stock has underperformed the broader market because the drop in the stock when the crisis hit was less than the market, as it belongs to the defensive sector of tobacco. That said, with the lockdowns being lifted, supply constraints are likely to ease leading to higher volume sold. Also, the expectations of rising sale of IQOS e-cigarettes in the US is likely to boost revenues and margins. This could take the stock to $48 – well beyond its February peak – reflecting a potential upside of more than 20%. Our conclusion is based on our detailed comparative analysis on Altria stock performance during the current crisis with that during the 2008 recession in our interactive dashboard.

2020 Coronavirus Crisis

Timeline for 2020 Crisis So Far:

  • 12/12/2019: Coronavirus cases first reported in China
  • 1/31/2020: WHO declares a global health emergency.
  • 2/19/2020: Signs of effective containment in China and hopes of monetary easing by major central banks helps S&P 500 reach a record high
  • 3/23/2020: S&P 500 drops 34% from the peak level seen on Feb 19, as COVID-19 cases accelerate outside China. Doesn’t help that oil prices crash in mid-March