Last several weeks in the market have been a true roller coaster ride. With bombardment of news on a daily basis (i.e. Trump’s promising great things for the economy based on the stock market, rise of COVID19 cases in U.S. and Asia, Fed’s announcement to buy corporate bonds, new infrastructure stimulus, Powell’s FOMC speech, etc) and the market constantly moving up and down, I probably wasn’t the one who felt dizzy and exhausted. Compared to all that craziness, last few days have felt almost too calm. However, the end is not here yet.
As I am writing, more market movers are probably brewing in the background, ready to be released in the next several weeks. As a Texas resident, it is terrifying to see Covid19 cases increasing by 3-4000 cases on a daily basis now. With Abbott being reluctant to take any actions that could negatively affect the economy, I think it’s safe to assume that the cases will only grow further in the near future. With this trend continuing, I can already picture the media heads shouting how the hospitals in TX, AZ, NC, and CA are running out of spaces. Trump also just signed a bill yesterday approving the sanction against China for its persecutions in the Xinjiang region.
My forecast for the coming weeks is, we might first see some growing followed by another dip with any of the issues that I just mentioned, which will be quickly countered by a cushioning action from either Fed or Trump. Then, I foresee another temporary bull market until it reaches a point that satisfies Powell and Powell stepping off from the QE pedal like he promised during the recent congressional hearings.
Whether you gain or lose from this crazy market, remember that just by taking a part in it, you are first handedly witnessing potentially one of the most historic economic events in the U.S. history.
tl;dr The sideway movements that we’ve seen in this week probably won’t last long. More craziness to follow for the coming weeks. Get your sleep while you can.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.