Another Gap Higher

The S&P 500 is looking to open higher again this morning following some crazy late-day trading yesterday. It may sound hard to believe, but today’s positive open will be the 11th time in 22 trading days this month that equities opened the day higher. Even though this has been one of the worst Octobers on record and the worst month in years, stocks have had positive opens on half of the trading days this month. The problem, as we all know by now, is what happens once that opening bell rings; there have only been six trading days where stocks have finished the day higher than they open.

For the full recap of all the major overnight developments around the globe, check out the full Morning Lineup.

When it comes to financial markets, the last few weeks provide a great example of how quickly gains can vanish. The chart below is from page two of our Morning Lineup, and it shows the relative strength of the S&P 500 vs the US Treasury Long Bond Future over the last year. When the line is rising it indicates outperformance from equities and vice versa.

It was only a month ago that the performance of equities was leaving treasuries in the dust, but in the span of less than one month, equities have given up more than half of their outperformance relative to Treasuries. Less than a month!