Market Briefing For Monday, June 8

Chest-thumping bulls might be hard-pressed to justify upside extensions at this point; however, there is a better 'tone' almost everywhere, reflected a bit by airline decisions in recent days; by reopening the economy broadly in a number of states; and even by Dr. Fauci hedging his 2nd wave warnings a lot; to the point of suggesting there won't be anything doctors can't control.  

 

Executive Summary:

  • S&P blew past resistance; and with promising additional stimulus might not be done yet; although the massive bond rally is re-converging a bit;
  • Yields going higher can become problematic; but probably not quite yet; however the 10-year rallies could influence Fed comments next week;
  • New highs for NASDAQ, NDX, SOX are all welcomed, as having been leaders off-of our 'Inger Bottom' low nailed in late March;
  • BLS 'admits' they may have made an Unemployment error by about 3%, but that didn't inhibit markets with the head-of-steam generated;
     
  • Economic recovery and 'social reopening' are in-tune with the market's move; however big-caps tend to overshoot a bit; while economy trails;
  • Carefree 'social-closeness' replacing social-distancing; as confidence increasing; even promoted (note zero masks worn at the White House gathering this morning); hopefully that's not getting ahead of itself;
  • Prospects of avoiding a '2nd wave' of Covid, even speculated by Dr. Fauci; and while he was probably pressured a bit; we hope that's the case and things are 'looking' better; with most analysts too conservative in either warning or flat-out bearish throughout the upside romp both as regards the stock market, and worst-case pandemic outcomes;
  • An FOMC meeting takes place; as the Fed already states they're reducing Treasury purchases to 4 Billion daily for the coming week;
  • Speculators are again leveraged (we thought they'd use it, based on gains the Fed largely engineered, as we've been optimistic about); it is a pattern that is somewhat algo-driven with ultimately renewed risks as this crowd (that missed the lows mostly) had to chase prices higher;
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Gene Inger 4 weeks ago Author's comment

To see my full report (this is an abridged version without most stocks and chart videos) pleas subscribe to my Daily Briefing at www.ingerletter.com thanks! Gene