Motivated. Stocks rose on the penultimate trading day of the year (yesterday) as light volume on high spirits carried the day. Brexit is all but done, AstraZeneca has an approved vaccine, and Americans will have to deal with $600 stimulus checks for now - status quo for the markets.
N O T E W O R T H Y
Check your calendar. It may as well be September 30th instead of December 31st. Wow, that is some statement to make on New Year’s Eve day. Yes, we are here, the final trading day of this most interesting, exciting, and tragic year in recent history. I have been writing about spirits, mythical rallies, and momentum lately. These are all things that typically show up in the final days of the year as investors, even in bad years, take a deep breath and face a new year with hope. By the way, as my regular readers know, I am oft overheard saying “hope is not an investment strategy”. That aside, there is nothing wrong with hoping that 2021 will be a better year, though it will take a lot for some sectors, industries, and stocks to better their 2020 performances. What that means is that hope, lots of it, is already built in to many corners of the market. At a high level, a very high level, I suppose it is safe to assume that, even if the health crisis is not completely solved in 2021, the World could certainly be much better off at this time next year, just how much, only time will tell. That view, that assumption, is what motivates investors to stick to their long term strategies. I won’t run through all the numbers just yet as we still have today’s session to contend with, and I am probably not the only superstitious Wall Streeter who believes it bad luck to count your chickens before the eggs hatch. So why did I make that statement about September 30th at the top of this passage? Because it is important to realize, that just because the calendar year is about to turn, it doesn’t mean that our journey is over. Many experts expect the upcoming quarter to be one of the toughest for the pandemic. Cases are spiking and we have yet to see the post-holiday surge. Vaccines are being administered but have reached far too few to have any real impact on the pandemic as yet. The goal was to vaccinate 20 million Americans by year-end, but only roughly 2 million shots have been administered. It is, after all, a logistical challenge and one that officials will certainly get better at over time. Still, more vaccines and therapies will come online in the coming months, which will surely provide yet more progress. Congress has approved a $600 stimulus check and much-needed billions of dollars in support of struggling businesses and institutions. According to the Treasury, payments were scheduled to begin as early as last night. Yes, things are improving slowly but surely, however we still have a lot more uncertainty to contend with, certainly in the next 3 to 6 months. That means, volatility in the markets is likely to persist. SO, it is extremely critical not to let ones guard down and expect that just because we have finally made it to 2021, markets will all go straight up. We love sayings and quotes on Wall Street. One of the most quoted soothsayers, aside from Warren Buffet, is the legendary early 1900’s trader Jesse Livermore, who was made famous by the book Reminiscence of a Stock Operator. His stories, filled with tidbits of wisdom, cover his career through the San Francisco earthquake, the roaring 20’s, and crash of 1929. One of the famous quotes from the book is: “The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor”. I shared this quote with you to remind you to stay sharp, stay focused, and maintain a long term perspective as we enter what will be a tough quarter. If we learned anything in this year, it was that staying the course and keeping our chins up even when the air was thin proved to be a winning strategy.
THE MARKETS
Stocks rose yesterday on thin volume. It was a light news day but progress on finalizing Brexit and a UK approval of the AstraZeneca vaccine certainly added to the positive sentiment of the day. The S&P500 climbed by +0.13%, the Dow Jones Industrial Average advanced by +0.24%, the Russell 2000 Index climbed by +1.05%, and the Nasdaq Composite Index traded up by +0.15%. Bonds climbed and 10-year treasury yields fell by -1 basis point to 0.92%.
NXT UP
- Initial Jobless Claims (Dec 26th) are expected to have risen to 835k from last week’s reported 803k.
- Continuing Jobless Claims (Dec 19th) may have risen to 5.39 million from 5.337 million.
- Next week’s numbers include manufacturing/services PMIs, Factory Orders, Durable Goods Orders, FOMC meeting minutes, and the monthly employment numbers. Check back on Monday for calendars and details.
- Stocks will trade a full session today but will close tomorrow for New Years. Bond markets will close early at 2:00 PM EST today and will remain closed tomorrow.