| Author | Message | ||
     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3789 Registered: 05-2011 Rating: N/A |
Market Briefing: Relief and a little bit of fear driving rally The recent troubles experienced by the stock market, and particularly high multiple stocks, had much to do with the monetary policy shift signaled by Fed Chair Powell. There are vestiges of those troubles still in the stock market today, evidenced by the underperformance of some growth stocks relative to the market. Still, today's rally effort is predominately about the Omicron variant and the hope that it isn't going to prove to be more virulent than the common cold. That hope has triggered a rotation out of safe-haven bonds and into stocks; it has fueled the outperformance of cyclical sectors; it has ignited a rally in value stocks; and it has led to a sharp pullback in hedging interest to protect against further downside. The CBOE Volatility Index is down 12.3% to 26.89 (versus a high of 35.32 on Friday). An added rally point today was the S&P 500 reclaiming a posture back above its 50-day moving average (4546). It did so last Thursday, too, after closing below that key technical level last Wednesday. In brief, this moving average has been a longstanding line of support for the market, and the quick snapback ability this time around has spurred some increased conviction in buy-the-dip efforts. So, today has been driven mostly by relief and a little by fear: relief in the idea that the Omicron variant won't be as bad as feared from a health and economic standpoint, relief that buyers have shown resolve with the violation of a key technical support zone, and likely a little fear of missing out on further rebound gains. |