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Entrepreneur
Kurra Bewarse
Username: Entrepreneur

Post Number: 3838
Registered: 05-2011

Rating: N/A
Votes: 0

Posted on Monday, December 20, 2021 - 12:58 pm:   

General de-risking to start Christmas week

The stock market has started this shortened Christmas week with a lump of coal in its stocking. The major indices are suffering some sizable losses in a general de-risking trade. The de-risking move has been catalyzed by several factors that have fueled growth concerns:

Reports of more countries tightening restrictions to protect against the rapidly-spreading Omicron variant.
Senator Manchin (D-WV) informing FOX News over the weekend that he cannot vote for the $1.75 trillion Build Back Better bill.
Worries that the Fed will make a mistake by tightening policy at the same time the economy is slowing, potentially making any slowdown worse.
Selling pressure has been persistent since the open, yet the understanding that it is a general de-risking trade is borne out in the following developments:

The Vanguard Mega-Cap Growth ETF (MGK 248.62, -3.84, -1.5%) is down 1.5% while the Invesco S&P 500 Equal Weight ETF (RSP 153.56, -2.95, -1.9%) is down 1.9%.
All 11 sectors are down. Losses range from 0.6% (consumer staples) to 3.0% (energy).
Declining issues lead advancing issues by a better than 5-to-1 margin at the NYSE and a 4-to-1 margin at the Nasdaq.
Today's selling interest follows on top of the weakness seen at the end of last week and it has dropped the S&P 500 below its 50-day simple moving average (4607). The latter is a key technical support level which has often triggered a buy-the-dip response, but so far buyers have remained a hesitant bunch in a vacation-minded market. The CBOE Volatility Index is up 18.3% to 25.51 on efforts to hedge investment portfolios.

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