E New Vaccines Prove That Majority Of Market Movements Is Due To Speculation

Joe Biden, along with European leaders, reminded the investment community that large-scale use of the vaccine is possible closer to the second quarter of next year, so measures to contain the coronavirus pandemic are still needed. We believe that market participants underestimate the probability of new restrictions in the U.S. and their consequences.

Asian stock markets closed in different directions. Japan's Nikkei added 0.26%, China's CSI300 fell 0.55% and Hong Kong's Hang Seng rose 1.10%. European indices in the green zone. EuroStoxx 50 is growing by 1.5%. The appetite for risk is increasing. The rate for 10-year-olds rose to 0.94%. Brent crude futures rose above $43. Gold is trading at $1885.

Today, a quarterly report from Datadog (DDOG), which provides a cloud-based data platform, will be published. The forecast assumes an increase in revenue by 50.6%, to $144 million, while the adjusted EPS increased from last year's zero levels to $0.01. The company's results exceeded consensus expectations for the last four quarters. Investors will be interested in revising the management forecast for 2020, which is in the range of $566-572 million at EPS $0.11-0.13. We warn that investors may ignore the report if the large-scale outflow of capital from the IT sector continues.

Freedom Finance's sentiment index dipped to 38 out of 100. The indicator continues to reflect concerns about the negative impact of the pandemic on the economy. However, an increase in the indicator from the minimum values may indicate an improvement in the prospects.

Technically, the SP500 is prone to a short-term correction. The broad market index updated the historical high at 3588 the day before, after which the pressure of sellers increased, so at the close, it was much lower. Please note that the importance as a resistance level was confirmed by the trend line connecting the peaks of February and September of this year. The resulting bull trap pattern worsens the short-term prospects of the SP500 and makes its position vulnerable. Recall that the broad market is still locally overbought after a sharp increase last week.

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William K. 2 months ago Member's comment

Was there ever any doubt that a large portion of the stock market activity is speculation? Of course some speculation that is built upon insight and data is reasonable, but that based on rumors or emotions is always suspect.