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Market Pulse: Thematic Stories Are Coming Back, and That Could Be Bullish
David Russell
November 5, 2020

Thematic stock groups are coming back as investors breathe a sigh of relief after the election.

Groups like sports betting, cannabis stocks and 5G networking are jumping on positive incremental news. This could be bullish for the broader market because it shows investors are looking past big, macro risk like coronavirus or elections. Small unique groups like these tend to outperform during periods of greater risk appetite and lower volatility.

  • Cannabis stocks are benefiting from marijuana legalization initiatives in states like New Jersey and Arizona.
  • 5G networking stocks are benefiting after Qualcomm (QCOM), Skyworks Solutions (SWKS) and II-VI (IIVI) reported strong numbers. They all cited 5G demand.
  • Sports betting benefited after ballot initiatives in states including Louisiana and South Dakota.

Two other potential themes could be worth watching:

  • “ESG” stocks including solar had big rallies before the election. They initially pulled back but are now bouncing.
  • China: The iShares China Large Cap ETF (FXI) has broken out to new highs while the S&P 500 and Nasdaq-100 remain below last month’s peaks. This is partially fueled by gains in the Chinese yuan.

Keep reading Market Insights for more on these themes into yearend.

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About the author

David Russell
David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.

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