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Posted December 31, 2020

Sean Ring

By Sean Ring

Part 4: The most powerful trade is…

Welcome to Rude Awakening for Thursday, December 31, 2020.

Happy New Year!

This week, as a wrap for the year, I’m sharing some primer videos to teach you important trading lessons, so you will be able to take the most advantage of my daily market insights and our Rude Awakening watchlists.

To recap what we’ve covered so far:

Part 1: Trading Options 101

Part 2: Learning to Trade Risk-Free

Part 3: Walkthrough of My Favorite Trading Platform

An asymmetric risk trade. We build them with two special twists.

Now, for a quick update on today’s market action…

Final Trading Session of 2020: A Mixed Market

Yahoo Finance reports:

Stocks were little changed Thursday with the final session of the year under way.

The Dow ticked up to a record intraday high, after the index hit a fresh record closing high during the regular session on Wednesday. The small-cap Russell 2000 steadied after gaining more than 1% on Wednesday. The S&P 500 steadied around its own recent record high.

Stocks are set to close out the year with strong returns, even given the lingering economic strain induced by the coronavirus pandemic. U.S. economic output remains below pre-virus levels even after a record third-quarter surge, and the labor market is still 9.8 million jobs short of its total before the pandemic hit in March. On Thursday, the Labor Department’s final weekly unemployment claims report for 2020 showed another 787,000 Americans filed for first-time jobless claims, for a sum well above the pre-pandemic weekly average of 200,000 new claims, but still the lowest level in a month.

But heading into 2021, a vaccine roll-out is under way and $900 billion in additional stimulus is set to be unleashed into the economy, offering hopes for a rebound in economic growth and corporate profitability.

“In the last couple quarters, the market probably got most of what it wanted to see,” Tim Courtney, chief investment officer for Exencial Wealth Advisors, told Yahoo Finance. “It got the vaccines with the high efficacy rates, it got very, very low interest rates, and so far low inflation moving into 2021. It’s got what looks like a divided Congress, although that’s still up in the air.”

“But moving into next year, it’s going to be how these things play out. Will the vaccine be distributed efficiently, effectively? Will consumer confidence rise to the point where we could get some of this deferred consumption in 2021, which is what the market wants to see? And will consumers be healthy enough, will these stimulus checks ... keep them above water long enough to have some kind of return to normalcy? The market seems to be priced for these things to work out relatively well.”

Lots of questions heading into a New Year with very high hopes.

We have endured the toughest year in recent history.

And we made it out the other side!

You should be proud of yourself.

Not only are you still here and kicking, but you are taking the time to learn and improve your finances, by reading this daily letter.

Well done.

2021 will have its own hurdles to maneuver, but let’s take a moment to feel some joy this New Year’s Eve.

I’ll see you next year!

Have a great trading day, folks.

We’ll talk again soon.

Regards,

Scott Stewart

Scott Stewart
Editor, Rude Awakening

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