Uncertainty in the Equities Market to Persist

We have only just hit the middle of the year, but 2020 has, so far, been a whirlwind season for equity investors. Since the start of the year, the novel corona-virus (COVID-19) has been the dominant theme in the markets, dictating investor sentiment and influencing the direction of market capital. The virus triggered a global pandemic and not only altered the normal routine of human living, but also the somewhat predictable behavior of investors.

Panic in the Markets

Equities were still trending higher by February 2020, but investors quickly grasped the danger of the health hazard as governments across the world implemented lockdown procedures that shut down economic activity globally. This triggered a widespread selloff that ensured stocks shed off an average of 25% by the end of Q1 2020. Still, the underlying investor sentiment was that a dip (no matter how devastating), catalysed by a health hazard rather than business fundamentals, represented a great opportunity to buy dips in a bullish market. Prevalent options trading strategies also were based a contrarian bullish opportunity in a panic selling environment.

During the start of Q2 2020, investors would quickly buy dips or aggressively extend their bullish positioning at the slightest hint of optimistic news. And there were plenty of them. Governments had started to ease lockdown restrictions amid positive coronavirus news in terms of death tolls as well as recovery and prevalence rates. Concerns of a second wave of the virus also ignited some anxiety and caused some instances of panic selling, but investors were seemingly more interested in positivity and would take every opportunity to buy falling stocks. These investor concerns have mainly come from jurisdictions that lifted lockdown measures as well as the possibility of increased infections as a result of widespread anti-racist protests in the US.

Central Banks Take Action

Beyond coronavirus updates, fiscal measures have also provided a tailwind pressure to equities. To ease the economic burden induced by the global health pandemic, central banks around the world implemented various quantitative easing measures and reduced base interest rates. The availability of cheap credit has ensured that investors have had a risk-off stance in the market, aggressively betting on the return to normalcy rather than maintaining an overly cautious optimistic tone.

So, what about safe havens?

Safe Havens in Market Turmoil

In times of panic, investors naturally drift towards safe-haven plays, and that has been the case again this year. Gold has managed to maintain an upward trajectory throughout 2020, but the yellow metal also bled furiously during the final weeks of Q1 as oil prices printed negative values due to spats between Russia and Saudi Arabia.  During Q2 2020, Gold has sustained an upward bias but not necessarily as a result of investor safe-haven plays. As stocks have edged higher, investors have been conflicted on what the future holds for price action. Indicators have shown that institutional investors have a cautionary stance while the bulk of the retail investing community has thrown caution to the wind. Institutions have every reason to maintain caution, but retail investors are more confident following the central banks that are propping up the economy. Overall, the conflicting signals in investor sentiment continue to bode well for Gold, which also remains supported by inflationary concerns as the majority of governments literally print more fiat.

So where is the opportunity?

With investors on both ends of the spectrum, the markets will seemingly maintain volatility in the short and medium-term. In the long term, the resumption of economic activity and the eradication of the corona-virus threat (probably through the launch of a vaccine) will dictate investor sentiment. There is no definitive timeline for this, and this essentially means that opportunity in the market is currently only available in the short term.  There is no clear signal for market direction, with this pointing to a spiky ranging market characteristic of investor indecision. Sharp dips will attract optimistic capital whereas big jumps will inspire profit taking and short sellers. With the US also gearing up for what is set to be a close and hard-fought general election in November, investors must be alive to the fact that volatility is here to stay. Range-bound plays (buying troughs, selling peaks) will no doubt be the smart money move if a volatile consolidation period dominates the second half of 2020. There is no need to either back bulls or bears; just back them both!



*** BEST STOCK NEWSLETTER of 2020 ALERT ***

Updated September 13, 2020

At WallStreetSurvivor, we subscribe to dozens stock recommendation and advisory newsletters. There is ONE newsletter that is constantly outperforming all of the others--The Motley Fool Stock Advisor.

ONE of this year's Motley Fool Stock Picks Has Already quadrupled, ONE has tripled, and another TWO Have Already Doubled in just 8 months of of 2020!

We have been tracking ALL of the Motley Fool stock picks since January 2016. That's almost 5 years, 55 months and 110 stock picks. As of Friday, September 11, 2020 the Motley Fool's January 2 stock pick (TSLA) is up 333%, their March 19th pick (ZM) is up 209% in just 6 months, and another two have more than doubled. In addition, 6 of their 2019, 8 of their 2018, 8 of their 2016, 9 of theire 2017 and 13 of their 2016 picks have also doubled. Most impressively, over the last 5 years that we have been tracking every recommendation, their average stock pick is up 135%. That beats the SP500 by an average of 95%. And that's even accounting for all of this COVID mess that has wreaked havoc on most stocks. BUT, the Fool has done so well because they have quickly identified stocks this year that will perform well in the post-COVID world. THAT is how the Fool consistently does so well--they adapt and constantly pick stocks before everyone else realizes the opportunities.

  • CrowdStrike (CRWD) -- June 4, 2020 pick is already up 32%
  • Shopify (SHOP) – April 2, 2020 pick and it is already up 164%
  • Zoom Video (ZM) – March 19, 2020 pick and it is already up 209%
  • DexCom (DXCM) picked Feb 20, 2020 right before the market crashed and it is still up 41%
  • Tesla (TSLA) picked January 2, 2020 before the crash and it is up 333%
  • HubSpot (HUBS) picked December 5, 2019 and it is up 82%
  • Netflix (NFLX) picked November 21, 2019 and it is up 54%
  • Trade Desk (TTD) picked November 11, 2019 and up 117%
  • Zoom Video originally picked Oct 3 and it is up 398%
  • SolarEdge (SEDG) picked September 19, 2019 and it is up 105%

Now no one can guarantee that their next picks will be as strong, but our 5 years of experience has been super-profitable. They also claim that since inception, their average pick is up 529% and now we believe them. You sure don’t want to risk missing out. Many analysts are saying that we have passed the bottom of this COVID crisis and stocks will recover quickly. So make sure you have the best stocks in your portfolio.

Normally the Fool service is priced at $199 per year but they are currently offering it for a NEW SUBSCRIBER DISCOUNT of just $99/year if you click this link

CLICK HERE to get access to all The Motley Fool’s Stock Picks and their next 12 months of picks for just $99 per Year! 



GET UP TO $1,000 IN FREE STOCK

WHEN YOU OPEN A ROBINHOOD BROKERAGE ACCOUNT

Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. They just past 10,000,000 accounts and to celebrate they are offering up to $1,000 in free stock when you open a new account.

Here’s the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $500. Then, you will get a link to share with your friends. Every time one of your friends opens an account, you will receive another free stock valued between $5 and $500. Click here to learn more about this Special Robinhood offer.

Claim your free stock NOW (before it’s too late)



Leave a Reply

Your email address will not be published. Required fields are marked *