This Is Froth, Folks
Welcome back folks to the Rude Awakening for Wednesday, November the 4th, 2020.
What an interesting day we have in store for us right now…
It was an interesting evening last night.
One of the things that we’ve talked a lot about is that cash is a position.
You don’t necessarily need to be in the markets, actively trading every single day. Furthermore, the days you generally want to stay out of the marketplace are when there’s market froth…
What Is Market Froth?
When I say market froth, I mean that there’s no discernible understanding of what’s happening in the marketplace.
Looking at the futures right now, we’re looking almost a lock limit up on the NASDAQ. The NASDAQ’s up almost 500 points right now. E-Mini is looking up about 55 points.
Big, strong, open to the market is what we’re looking at right now.
But last night during the futures market, at one point we had the NASDAQ limit up.
It had locked up limit, stopping trading for a little while there. And at that same moment, the E-Minis, the S&P 500 slightly negative on the day.
A little bit later in the evening last night, we had the S&P 500 up solidly, and the Dow futures down 400 points simultaneously.
This is froth, folks.
Obviously, this is all related to this little event that’s happening right here before our eyes…
We still don’t know who’s going to win the election. It may be several days before we know.
Right now, if everything fell the way that it is leaning, looks like president Trump would hold the presidential office, but that’s a big if. There’s still a lot of states in play, still a lot of unknowns.
The market seems to love clarity, and that’s always been an interesting aspect of trading is that the market doesn’t necessarily abhor bad news. It abhors uncertainty.
And just the idea that we’re going to get this hurdle out of the way after so much contention, so much debate is appealing to the marketplace.
Either way, the market seems to be thinking: “If Trump wins, we’re going to have lower taxes. That’s good for Wall Street. Wall Street runs main street. That might be good for the economy. If Biden wins, we get a huge stimulus package. That’s going to pump money into our pockets as well.”
I think the market is good with either choice here, folks, but it’ll be interesting to see how this plays out today.
Real Numbers Hitting Today
Private payroll numbers came out this morning. Horrible, half of what was expected, and yet the market doesn’t seem to care!
Lots happening today, guys.
This rest of this week should be volatile for us as well.
We are still in the peak of earning seasons. A lot of companies have already reported.
We’ve also got the Fed coming out on Thursday.
We don’t expect too many changes with the Fed statement, but you know that the Fed can always throw a monkey wrench into what’s happening in the marketplace.
So it isn’t just the presidential election today, folks, that are causing this volatility in the marketplace, there’s a lot of stuff going on this week to keep an eye out on.
Let’s take a look at our stock of the day, and that is Alibaba (BABA), one of the largest cap stocks that is out there right now.
BABA is currently trading at $297. As I said, this is reporting earnings November 5th, tomorrow, before the opening bell.
So this is going to be a stock that you’re going to want to keep an eye on for tomorrow.
A lot of stuff happening in the marketplace, folks.
Be safe out there. We will talk to you guys tomorrow.
Editor, Rude Awakening