Here are the 3 ways stocks are likely to end in 2020, says trader



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A month before and we’re done with 2020 – and good riddance for a dismal year. When it comes to stocks, however, the year looks to a much less negative year than many expected, given a deadly pandemic.

There is still a small part of the year to negotiate and much debate over whether we will be witnessing a so-called Santa Reunion which tends to occur in late December and early January, or if the markets are running out of steam. .

Our call of the day comes from Mark Newton, President and Founder of ML Newton Advisors, a web-based advisory / subscription-based financial service. He says investors might see stocks go one of three paths.

“The stock market as a whole is faced with the task of confirming the recent rally with a solid pursuit (not a pullback!) Move. Will this happen? That is the big question, ”Newton says in a blog post for See It Market.

The first possibility is he predicts that the stock markets will follow these gains. Investors would see the ValueLine VALUA Composite Index,
+ 0.39%,
the NYSE Composite NYA,
+ 0.29%,
S&P 500 SPX,
+ 0.17%,
and Nasdaq Composite COMP,
-0.04%
all are peaking above their February highs. At the same time, the VIX VIX volatility index,
-1.51%
– a measure of stock market volatility – would push back its August lows.

“That would set the tone for another two or three weeks of rallying, which would take the indices higher throughout December,” Newton said.

The second option would involve a “slight pullback” for stocks, in the form of the US dollar DXY,
-0.43%
reverses recent losses. He expects the S&P 500 to hold around 3,585, then climb to around 3,720 in the middle of the month.

The last option – the most cranky of all – is the least likely to happen, he says. The market would return all of Tuesday’s gains, going through 3,585 and then dropping below 3,540.

Alas, the euphoria still seems to bother him. He points out via this retweet that the cover against a 10% loss on the Nasdaq is the cheapest since 2018.

And he points out that buying options are booming right now. This gives buyers the right, but not the obligation, to buy an asset at a future date at a set price. In short, these are bullish bets.

The steps

ES00 futures contracts,
-0.00%

YM00,
+ 0.05%
are lower, apart from Nasdaq-100 NQ00 futures,
+ 0.18%.
European SXXP Equities,
-0.15%
are stable and Asian stocks have been mixed. Chinese service sector data is better than expected.

CL.1 oil price,
-0.06%

BRN00,
+ 0.02%
are down, ahead of a decision on production cuts from an already delayed meeting of the Organization of the Petroleum Exporting Countries and its allies.

Table

According to Albert Edwards, global strategist at Société Générale, if the United States faces a double-dip recession, markets may find it difficult to “look through” it.

“Maybe they will this time around, but history suggests otherwise, especially if the United States follows Japan and the eurozone in outright deflation,” he said in a note to clients. Here is his graph.

Societe Generale

The buzz

Weekly and continuous unemployment claims are ahead, followed by the Markit Service Purchasing Managers Index and the Institute for Supply Management Service Index.

Tesla TSLA shares,
-2.72%
are up, after Goldman Sachs upgraded the electric carmaker to bullish buy ratings from neutral and its price target at $ 780 from $ 455.

Tensions with China are simmering, after the Democratic-controlled House of Representatives approved legislation to kick Chinese stocks from U.S. stock exchanges. President Donald Trump may sign it soon.

House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said the $ 908 billion plan from a bipartisan group of lawmakers could be a basis for negotiation.

COVID-19 hospitalizations in the United States hit 100,000 for the first time on Wednesday, with deaths also at a record high, as Centers for Disease Control and Prevention warned of “toughest three months Of the history of public health to come. Another big problem for the United States? Misinformation about coronavirus vaccines, warns the president of the University of California, San Francisco Medical Department. Germany could extend its partial lockdown for another three weeks.

Snowflake,
-4.23%
shares are down sharply, after the cloud company fell to a loss in the first set of earnings since going public.

On the retail patch, Dollar General DG revenue,
-1.04%,
Michaels MIK,
+ 0.34%,
and Kroger KR,
-2.18%
are ahead, while the shares of Five below FIVE,
-3.73%
climb after good results.

Random readings

Cereal Donut and other hot food trends for 2020 via the TikTok video sharing app.

The planets Jupiter and Saturn are coming together for a rare event this month.

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