Week-In-Review: Stocks Soar After The Election
Monday-Wednesday’s Action:
Stocks rallied nicely on Monday which was the first trading day of November. The Nasdaq was off to a nice start but briefly turned negative then closed higher in another rocky up and down day. Stocks rallied nicely on Tuesday as the country voted for the next President Of The United States. In other news, Covid-19 cases continued to surge. The seven-day average of daily new coronavirus cases hit 83,805 as of Sunday, nearly 20% higher than a week ago, according to a CNBC analysis of Johns Hopkins data. Stocks rallied sharply on Wednesday as the so-called blue wave didn’t unfold. The big reason why the market is rallying is because the election is over and that uncertainty is largely behind us. Even though we don’t have a clear winner yet the “good” news is that we can move forward and focus on other things.
Thursday & Friday Action:
Stocks rallied sharply on Thursday as the Fed basically said it plans to keep rates low for the foreseeable future. In other Central Bank news, the Bank of England fired a larger-than-expected round of easy money. The BOE announced 150 billion pounds ($195 million) of quantitative easing to help the economy as the U.K. enters further Covid restrictions and the post-Brexit relationship with the EU remains uncertain. Elsewhere, the European Union cut its growth forecast for 2021 as the second round of pandemic restrictions in the region risk putting a halt to the recovery. In the U.S., new cases came close to 100,000, as deaths and infections worldwide surged. Stocks rallied on Friday after the jobs report was announced.
Market Outlook: Flood The System With Liquidity
The bulls showed up and defended important support (September 2020’s low). Looking forward, as long as that level holds, the bulls remain in control. If all the major indices break below September’s low then odds favor lower prices will follow. Earlier this year, global governments, and global central banks, once again, stepped in with massive rate cuts and other “aid” packages to help “stimulate” both Main Street and Wall Street. That said, longer-term, as long as March’s lows hold, the market will likely move sideways to higher. On the other hand, if March’s lows are breached, then look out below. As always, keep your losses small and never argue with the tape.
Disclaimer: All our work is for educational/informational purposes only. It is general in nature. No specific investment advice is given.