E Market Briefing For Thursday, July 9

Executive Summary:

  • The Bull/Bear rivalry often fails to realize this market has not and is not up on anything related to the economic conditions or immediate recovery prospects coming out of a V-bottom in the S&P, more so than in the overall economy.
  • This market is envisioning (besides the leverage liquidity employed since the beginning of the recovery in late March) a serious recovery from COVID-19, too, at the same time a primary 'reason' for advance is the ability to engineer it.
  • Government 'assistance' (a gentle term) enabled this, and that liquidity has a slew of institutions, and lots of individuals too, pressing upside in 'super-cap' stocks, often irrespective of valuation associated with 'price'.
  • That's even if they'll massage numbers to give some 'cover story' for what is liquidity-driven trading, and ironically without the stimulus funding 'structure' the Fed provided, there's a prospect that this action would not be feasible.
  • Hence the opposite interpretation applies: the market has been interesting, because there is disconnect between stocks and economy struggles.
  • Now, outside the separation from reality by S&P (after the solid advance we called-for coming off the nailed March lows), you have a concentrated focus on technology and stocks that actually do reasonably well during COVID-19.
  • S&P and Nasdaq remain in the higher portions of the weeks-long trading range as often discussed, and will have trouble ignoring the rising case loads resulting from COVID-19, if this week's slight rebound in mortality persists, or of course if we finally get a retreat in a couple days for technical reasons.

  

 

Daily action - Futures are down about 5 handles at press-time, and Thursday is looking to be yet-another session of (probably) a soft opening, but then further upside, even if gains are trimmed later. No change in our overall view.

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William K. 3 months ago Member's comment

Interesting, and thanks for the comparison between the 1918 epidemic and the 2020 epidemic.