We’re not going to get into too much detail here today. The world is looking forward to a COVID-19 vaccine and we think that markets will likely continue to respond positively. On the home front, it seems that most of the lockdown restrictions are being lifted as well, which will likely positively boost selected sectors and stocks in the week ahead.
After strong earnings reports from tech stocks in the U.S. and more rhetoric around continued stimulus, markets closed last week on a strong note. We’re sticking to the good old technicals for this week and highlighting some of the stocks that we have been watching.
During the last week we started seeing some signs of distress in the Nasdaq, with some heavyweights beginning to show a little bit of weakness. Our strategists put up two posts on the current outlook on the Nasdaq on the International Outlook blog, which showed some key support levels being tested and broken. With those in mind we are slightly more cautious this week.
The world is mostly mad, but luckily our views and beliefs about the world around us has little to do with what is actually happening, and the key to moving forward is to respond appropriately to the external environment, regardless of whatever it is that we might believe. Our job as traders is now and has always been to simply follow the market. Therefore we look mostly at technical analysis again this week so that we stay unbiased.
It’s no secret that this is probably one the most hated stock market rallies of all time. In fact, that is probably pretty accurate for the entire bull market since 2009, really. The question is when? Another good question is, is our idea of what fair value is anywhere near what it really is? In truth, we don’t really know how things will turn out. All we can do is trade the setups that we see and make sure that we manage risk accordingly.