Santa Claus rally continues with stocks at record highs
- More market records seem to be in store for today, with futures ahead
by 0.5%, after the signing of a COVID relief bill that lifted reopening
plays like cruise lines, airlines and casinos. Megacaps led the major
averages on Monday, while nine of the 11 S&P sectors ended in the green.
- "The market right now is clearly foaming at the mouth," said Charlie
McElligott, a market analyst with Nomura Securities, though the rapid
gains
seen this year are dividing some investors on how to proceed in 2021. The
S&P 500 is up 15.6% for the year and the Dow has advanced 6.5% over that
time frame despite the pandemic. The Nasdaq Composite, meanwhile, has
soared more than 43% in 2020.
- *The bears:* Ominous parallels have been made between this market and
the internet bubble, and a correction could at least be in the cards.
Valuations are also stretched beyond memory with margin debt at records,
while traditional stock metrics and fundamentals have gone out the
window.
Runaway shares for recent IPOs like DoorDash, Airbnb and Snowflake could
additionally cause some alarm, especially when the companies aren't
profitable and CEOs express bewilderment over their stock prices.
- *The bulls:* Assurance from the Fed that it will continue easy money
policies, keeping markets stable and interest rates low. Retails
investors,
who have piled into the market this year, also seem to be a driving force
for the market's upward trajectory. The contentious presidential election
is now over and a national vaccine rollout further signals the start of
an
eventual return to normal.
- *Does the old Warren Buffett maxim still hold true?**"Be fearful when
others are greedy, and greedy when others are fearful." *Comment below.
- The Alpha TALKS podcast discussed the Santa rally, which runs during
the last five trading days of December and the first two trading days of
January, in its latest episode.
|Today, 6:05 AM|48 Comments
- More market records seem to be in store for today, with futures ahead
by 0.5%, after the signing of a COVID relief bill that lifted reopening
plays like cruise lines, airlines and casinos. Megacaps led the major
averages on Monday, while nine of the 11 S&P sectors ended in the green.
- "The market right now is clearly foaming at the mouth," said Charlie
McElligott, a market analyst with Nomura Securities, though the rapid
gains
seen this year are dividing some investors on how to proceed in 2021. The
S&P 500 is up 15.6% for the year and the Dow has advanced 6.5% over that
time frame despite the pandemic. The Nasdaq Composite, meanwhile, has
soared more than 43% in 2020.
- *The bears:* Ominous parallels have been made between this market and
the internet bubble, and a correction could at least be in the cards.
Valuations are also stretched beyond memory with margin debt at records,
while traditional stock metrics and fundamentals have gone out the
window.
Runaway shares for recent IPOs like DoorDash, Airbnb and Snowflake could
additionally cause some alarm, especially when the companies aren't
profitable and CEOs express bewilderment over their stock prices.
- *The bulls:* Assurance from the Fed that it will continue easy money
policies, keeping markets stable and interest rates low. Retails
investors,
who have piled into the market this year, also seem to be a driving force
for the market's upward trajectory. The contentious presidential election
is now over and a national vaccine rollout further signals the start of
an
eventual return to normal.
- *Does the old Warren Buffett maxim still hold true?**"Be fearful when
others are greedy, and greedy when others are fearful." *Comment below.
- The Alpha TALKS podcast discussed the Santa rally, which runs during
the last five trading days of December and the first two trading days of
January, in its latest episode.
|Today, 6:05 AM|48 Comments
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