You figured that they would have known that there was going to be another good news pump on Moderna vaccine news today, but there are still a lot of non believers out there. Not of the vaccines, but of this rally where the market is steadily going higher as the number of coronavirus cases skyrockets in the US and Europe.
There are STILL a lot of investors that are fearful of exploding Covid cases and lockdowns. Lockdown is such a scary word to these people, who think that the stock market can't go up if bars and restaurants are closed. Its almost as if these investors think the economy is dependent on people going out to eat and drink. No, people can eat and drink at home, and with the savings that they accumulate from not going out, they can use that to buy stocks. How about that logic?
There was news last week that the amount of inflows into equity funds was the most since a couple of years ago. That is the kind of news that matters to the market, not the number of coronavirus cases. The stock market is about supply and demand, and when you are in peak buyback season, and also have a huge amount of money coming in these days after holding back due to the election fears, that is a simple formula for higher prices.
Let's not make this job harder than it is. Let's not look at what happened in March when virus was raging out of control and think this is a repeat of that. Now, with hope from the vaccines, which are being pumped as a silver bullet, the market sees the end of the tunnel when it comes to the Rona and that's all it needs to know. The stock market doesn't care about deaths, or numbers of people getting ill, it only cares about who is the more eager side, the buyers or the sellers? And its shown since the election that the buyers are much more eager to get in than than the sellers are to get out.
I am staying long here, might get a little pullback in the morning off the big gap up, but expecting a grind higher into November opex, on Friday. Not interested in the short side, and after I sell longs, will look to buy dips.
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2 comments:
"No, people can eat and drink and home, and with the savings that they accumulate from not going out, they can use that to buy stocks."
This would only happen for the short-term, as did the first time around. There will no savings with the high unemployment that hasn't even recovered yet, but new restrictions and jobs losses to follow.
That assumes that there will be no fiscal stimulus. But you are going to get a ton of government spending and handouts in 2021. That will more than make up for any extra unemployment due to the 2nd wave. Unemployment doesnt matter anyway. The people who control the vast majority of stock market wealth don’t rely on wages to maintain their lifestyle, they depend on financial assets. Bar and restaurant owners and workers aren’t your marginal buyer of stocks. In fact, many probably dont even own stocks.
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