Part 2: The Solution
Welcome to the Rude Awakening for Monday, February 8, 2021…
On Friday, we started your specialized training series on asymmetric trading with Part 1: The Problem.
After this ten-part series, you will have the edge you need to feel confident in all your trades, no matter what the overall market is doing.
And for a quick update on market action today…
Markets Flat Yesterday, Skyrocketing Today
Stocks across markets are up this morning once again. Last week gave us the best levels in the major indices since November.
Yahoo Finance reports…
The Dow added more than 100 points, or 0.4%, to a fresh record high, and both the S&P 500 and Nasdaq also reached record intraday levels. Bitcoin prices spiked more than 12% to a record high of more than $43,000 after Tesla disclosed it purchased $1.5 billion of the cryptocurrency and may start allowing customers to use Bitcoin to purchase products.
Investor optimism over another round of fiscal stimulus out of Washington helped boost U.S. equities over the past week. A disappointing monthly jobs report last week bolstered the case for additional support to households and businesses, according to lawmakers including President Joe Biden. And Treasury Secretary Janet Yellen told CBS on Sunday the U.S. could return to full employment by 2022 – or two to three years ahead of some current projections – if measures in Biden’s $1.9 trillion coronavirus relief plan were enacted.
Both the Senate and the House of Representatives voted to move forward with a legislative process known as reconciliation, allowing Democratic lawmakers to try and expediently pass another major coronavirus relief package without needing Republican votes. Congressional committees are poised to begin drafting legislation for the package starting this week, which is expected to include another round of $1,400 stimulus checks, hundreds of billions of dollars in state and local aid and enhanced federal unemployment benefits.
Meanwhile, COVID-19 cases in the U.S. have started to show encouraging signs of easing, though uncertainty still remains over the path of the virus going forward. New cases have averaged just below 118,000 per day over the past week, for a drop of 31% from the average from two weeks earlier, according to New York Times data as of January 7.
Still, however, tight vaccine supplies are on the COVID-19 vaccination program, even as the rate of vaccinations has recently improved to more than 1 million doses per day. Biden told CBS Evening News on Sunday that it would be “very difficult” to reach herd immunity, or with about 75% of the U.S. population vaccinated, by the end of this summer.
Bullish activity is good for investors, of course, but we still know that this market is overvalued. We have been due for a retracement for quite some time.
That’s why I like putting on asymmetric trades, getting my money in and out of the markets rather than giving it over to the whims of wild swings like we have seen.
Have a great rest of your trading day.
We’ll talk tomorrow!
Editor, Rude Awakening