The stock market looked chaotic last week and offers little guidance for what will happen Labor Day week. Like always, there are two schools of thought: bullish and bearish. Here I’ll give you both arguments in The Ventric’s Weekly Stock Market Update.
It’s always good to be confident and optimistic but being a realist is ideal. The market experience a 5% pullback on Thursday, but that could be seen as a positive. Pullbacks are generally healthy in a bull market, uninterrupted climbs are risky and weak. But pullbacks allow for a more practical and sturdy build.
The pullback this week is seen more as a little bump that shouldn’t affect gains in the near future. The pullback could also be seen as a way to provide more realistic pictures of what companies should be worth.
One reason to still be optimistic is the fact that nothing has really changed so why would the market change? Interest rates are set to stay lower for the foreseeable future due to the federal reserve trying to help the economy. A second stimulus has been talked about with plans of it being passed soon. And the elections don’t seem to have investors rattled since both Trump and Biden are seen as pro-business.
Even though COVID cases are predicted to increase this fall and winter, it does not seem like the market as a whole cares too much about it anymore. There have also been vaccines teased over recent weeks which could lead to even larger gains.
With investors being more aggressive every day, the stock market has the support to keep growing its gains.
All good things must come to an end. The pullback experienced on Thursday is a warning sign of what’s to come. The recent bull market could be seen as irrational as investors were itching to buy into any kind of good news that came out.
September and October are generally seen as low performing months. And with the elections coming on November 3rd who can know what is to come then. COVID does not seem like it won’t go away for the foreseeable future. A second stimulus has been promised but never passed. Road block after road black has stopped the American people from receiving additional aid.
The market is back to where it was pre-COVID, some sectors are actually higher now. So a recalibration seen as something that could very well happen soon.
Many company’s are now seen as over-valued due to their current gains. A bear market might provide more accurate company valuations.
Lots of company’s stock prices have gone higher than their earnings which means more pullbacks might be coming. A majority of the investors are bullish so they can carry the market to higher gains if nothing extremely bearish happens.
If you buy stocks in solid companies like Apple and Google, then you shouldn’t be worried. Especially if you’re thinking of keeping them long term.
Notable Stock Performances
|Current Price (9/5/2020)
Stocks to note here are Apple and Tesla since they just went through a stock split. Tesla took the hardest hit, while Apple bared the weather a bit better. Apple also just became first US publicly traded company to pass the $2 trillion mark with many thinking $3 trillion is coming sooner than expected.
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