Payne's Perspective: July 13, 2020: Market Poised to Break Out
It was a fantastic week for the stock market. The rally was tested and held up and even displayed signs of being able to rally without Technology and Communication Services stocks leading the way.
Moreover, it has become abundantly clear to me that the market only sees two outcomes in the fight with COVID-19: a vaccine or herd immunity. It just does not appear the nation will go back to complete lockdown. It’s unlikely any state would go into lockdown either, and that makes all the difference between the rebound stalling or imploding.
Obviously, investors want a vaccine. Friday’s session looked as if it would have been a down day for major equity indices about one percent or less. Then came positive news from Gilead (GLD) on their main COVID-19 vaccine. Not only did the market reverse their losses to stay open unchanged, but buying also triggered additional buying.
To be clear: without a vaccine, the market will probably grind higher, not making significant broad gains. There will continue to be giant individual stock and sector winners, but with limited downside.
Conversely, a vaccine sparks a move that underscores pent up demand, and a record amount of funds that consumers have been sitting on figuratively and literally.
It has become a part of the presidential election lore that is part ‘conspiracy theory’ and part ‘blame game.’ There is no doubt we should brace for an onslaught of shocking news on the eve of the election. Going back to October 26, 1972, the election was less than two weeks away, and many historians believed the outcome was sealed by Henry Kissinger.
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