Mike Santoli’s market notes: Traders scramble to chase the vaccine-fueled rally

Published Mon, Nov 9 20201:12 PM ESTUpdated Mon, Nov 9 20201:19 PM EST

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. (This story is for CNBC Pro subscribers only.) Waves of relief wash over a market already primed to make a run, vaulting the indexes above former peak levels. Stocks were going to open higher no matter what today, a continuation of the tension-release rebound that got underway last week. The Pfizer vaccine news super-charged the effect, and changed its character. Massive forced repositioning from "growth, low yields, slow recovery" beneficiaries to "reopening, cyclical-rebound, reflationary" plays. Hard to overstate just how much this is about traders getting whipsawed and feeling constantly under-exposed to the theme of the day. Just days after being forced out of the value/Blue Wave stance (which would have been ideal today) then were pushed right back into it. Not trying to downplay the Pfizer news – it allows the market to look plausibly ahead to a fuller return to normalcy within several months and gives investors a credible excuse to ignore any interim slowdown. But this all will not happen overnight, there will be rethinks and switchbacks along the way. A huge upside gap to set a new high in the S & P 500 is an unusual move. Usually it grinds and makes a more orderly approach. The exaggerated action is a measure of how under-invested the big money feels heading into FOMO season. This is a pretty vertical path out of the trading-range box. Breakouts are bullish, but it'll likely need to cool off. The profit-taking in expensive stay-at-home tech is intuitive and is restraining the S & P 500. The equal-weight S & P is up double the headline index. Small caps are ripping. Banks have gone silly, up 12%. A lot of stuff needs to settle out, but the buying urgency is clear and longer-term is more bullish than not. Market breadth is quite strong, particularly on the NYSE (over 85% upside volume). More than 300 new 52-week highs on each NYSE and Nasdaq are the strongest in a long time. Credit is responding with ludicrous strength. The HYG junk-bond ETF is up 1.3% in price while comparable Treasury prices are down 1% - a wild compression of risk spreads that shows the market re-pricing the prospects for some of the hardest-hit parts of the economy. VIX getting slammed, down under 23, near summertime lows and not far from "normal levels." This has positive short-term self-reinforcing effect on the rally. Lower VIX tells certain systematic traders they can take on more market risk and leverage, probably some more of this to go. I didn't anticipate this vaccine-propelled surge today, but in my weekend column handicapped the year-end setup, all still relevant.

A stock trader wearing a mask walks near social distancing signs the day a new IPO is launched at the New York Stock Exchange as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on August 27, 2020 in New York City. The fourth phase allows outdoor arts and entertainment, sporting events without fans and media production.

Alexi Rosenfeld | Getty Images

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics.

(This story is for CNBC Pro subscribers only.)