Based on today's numbers it's clear that the economy is stagnating. I'll admit that I don't have the experience to speak with authority, but it's obvious that the market is a runaway train that is bound for a crash. Consider this:
So, what's the point. News is being cherry-picked. The pros are letting the retail investors call the shots for now. But beware; there is no real justification for the current levels - or even within 10% of the current levels. I don't think this is the end of the world, and investors overreacted to the virus in March/April, but it's not for nothing. Does stagnating employment crises, still-occurring public health crises, tepid growth really justify resuming the record-breaking stocks? No. It does not.
- Prior to the election the market retracted upon growing caseloads to shed some overpriced stock, spurning positive earnings from its darlings AMZN, AAPL, and the like. This was frequently referred to as a "rotation" with the money flowing into the industrials and manufacturing.
- A week later - during one of the strangest elections in history, it climbed aggressively, with the aforementioned high-cap tech stocks rising to resume their climbs to all-time highs. However, the industrials did not deflate as a result - so much for a rotation.
- Then the vaccine announcement which - to be fair- was one of the best news drops we could get; 95% effective and ready for emergency use. Interestingly the market gapped and did a hard and fast walk-back to back within its standard deviation. The industrials again peaked with what I heard referred to as another "rotation" (again, from what - everything is still too expensive).
- Since then we've had two more positive vaccine announcements each met with an increasingly cool reception with hospitalization, infections, deaths, and unemployment rising.
- Trump begins the formal process to transition power to a Biden administration and suddenly it seems that the market cared about politics after all with a gap, a short squeeze, and another ATH across the market on the 24th.
- Futures rose even another 0.5% higher before opening flat on the 25th, which begin a sell-off in anticipation of the upcoming FED minutes at 10am. Despite most of the news indicating that the market is stagnating, lockdowns looming with COVID deaths hitting highs not seen since May, Income, and GDP missing projections, and Manufacturing investment being propped up by Military spending (in a big way), what reaction do we get? A tepid attempt at a Rally and no real rebuff closing within .2% of the 24th's ATH.
So, what's the point. News is being cherry-picked. The pros are letting the retail investors call the shots for now. But beware; there is no real justification for the current levels - or even within 10% of the current levels. I don't think this is the end of the world, and investors overreacted to the virus in March/April, but it's not for nothing. Does stagnating employment crises, still-occurring public health crises, tepid growth really justify resuming the record-breaking stocks? No. It does not.