Evening all.
I’ve been trying to decide what I think of today’s record breaking rally in the US markets, and I think the closest I can get is bewilderment.
I recently had to revise my downside expectations to be worse than I had forecast because of the extraordinary extent of the lock downs taking place across the globe.
These lock downs gathered pace in the last 24 hours with countries like UK, Israel, Egypt and India all going into a more complete lock downs and others like Finland considering it.
Then there was the Governor of NY giving a stark warning that things were going to get bad, while at the same time President Trump is talking about opening the country for business again. The WHO also suggested the US will become the next virus epicenter.
So the markets went with the promise of a huge stimulus package coming on the back of the FED’s unlimited QE announcement which was further fuelled by expectations that business might get back to normal in the US very soon.
I’m concerned that markets got ahead of themselves with moves of this magnitude and I’m not sure investors should be chasing the market already, assuming that the bottom is in.
I thought there would be a rally into the the stimulus announcement but we’ve already had 11% on the Dow today without that announcement so if there is a further move when it comes, maybe even tomorrow, then there could be a sell the news reaction on the basis that there is justified concern that things will get a lot worse as the NY Governor and other countries are forecasting.
I’m going to be looking for profit taking opportunities if there is another thrust higher before the weekend because this market strength could fade quickly and having gone almost fully invested last week, it would be good to build a bit of cash again ahead of more volatility.
Lots to consider at the moment, added to by us being on Day 1 of a national lock down here in the UK which is set to last for several weeks.
Thanks for your time.
$SPX500 $NSDQ100 $DJ30
