I was fully expecting the day to test 3100, but I did not expect what came next.
The market gapped higher hitting SPX 3100 right at the open, and sat for a while. This is where we would typically see a drop below the magic number (3100), indicating it was all forced buying on the open. Instead, we kept climbing the rest of the day.
This was not oil or bonds, or even gold helping the market higher. The FAANG stocks have not led anything higher for weeks. This was all travel related stocks that had been beaten down hard in the coronavirus selling. Boeing (BA), for example, climbed 19.85 (12.95%) on the day. American Airlines climbed 5.6%.
After the market planted its flag on terra firma SPX 3,100, it continued a very shallow but consistent assent before hitting a high of 3,130.84.
I have been saying all year, including when down 36%, that the market was going to close the year higher; however, even I was surprised by the strength of the market given the riots, increased tensions with China, etc.
Make no mistake... It is my opinion that we entered the “point of no return” in a new cold war with China. It is what it is, and will eventually decrease our GDP by 3%, while taking their GDP down a LOT MORE. They are going back to the financial stone age if they continue flexing their muscles with this President. Their only hope is if Biden wins, or they learn a little humility.
Recall that back in the 1990's, Japan got too big for its britches and became the richest nation on earth. We could not stand for that, so we reshuffled the deck. Now the deck is going to be thrown off the roof.
- Trump banned flights from China to the US – not because of the coronavirus.
- Trump slapped “foreign mission” restrictions on Chinese media outlets.
- The UK is considering offering citizenship to 3 million Hong Kong residents.
When the world wakes up to this, and things get more heated, we will fall hard. Right now, however, the market is SUPER STRONG. We are up 30% in 50 days. There is almost $5 trillion in money market funds waiting to be deployed. The Fed is printing money, and interest rates are at near zero. I actually should be surprised we are not higher.
We are only down 3.3% for the year in the SPX. LOL