Channeling Inner ‘Cautious Bull’

2020-12-17

Traders today are experiencing two differing economic landscapes.

There is a real world economy where individuals and businesses are struggling to survive. And there is the financial world economy where profits keep rallying higher with seemingly little concern for the real world.

As the year winds down, which of these economies will most influence the stock market into the New Year?

Covid-19 vaccine distribution is underway as cases and deaths remain high and a new round of lockdowns has begun across the globe. There is a downtrodden feeling of no quick return to a “normal” world economic recovery.

On the financial side, there continues an air of “certainty” and “hope” that all is well and can only get better. That sentiment was stimulated Wednesday with the Fed committing to purchasing more assets and keeping interest rates low in a show of “we got your back” for the financial world.

“Experts” continue touting a path ahead with economies rising beyond the pandemic on the way to a great expansion period over the next few years.

Such a rosy outlook in a still uncertain world leaves a nagging feeling among Simpler’s veteran traders of when the “other shoe will drop.” A high-upside market built on Fed support and a “positive outlook” may be destined to retest the low with any new catalyst.

Simpler’s traders remain cautiously bullish as the market is extended through key levels. Sectors have gained strength and leading tickers have continued to rally higher in this upside “channeling trend.”

Protecting gains and managing risk, stops, and position size is a focus through the end of the year. This will allow Simpler’s traders to channel their inner “cautious bull” while not getting caught up in any sudden rough ride in this still uncertain market.

We Saw: Markets rally to new record highs — 

  • Fed’s low interest rate hits U.S. dollar
  • Politicians muddle way toward stimulus package
  • Traders banking on stimulus to boost markets higher

We’re Watching: John’s “Predictions 2021” webinar tonight

  • Retail, travel, hospitality sectors
  • Will breakouts in key tickers
  • Setups in: AMZN, TSLA, IWM, OKTA, PLTR