How To Trade Confusion In The Market

What a week.

The S&P went off to the races closing over 3500 again.

Why???

“We don’t know who the president is yet, shouldn’t we be selling off?”

“Covid is a huge problem, shouldn’t we be selling off?”

“The economy still is not great, shouldn’t we be selling off?”

Here is where people sometimes get tripped up by the market:

Just because something is bad…doesn’t mean that the market is going to sell off.

The market is forward looking, it cares about earnings and growth.

The reason the market is rallying is because it KNOWS there will be an outcome to who won the presidency…and its almost CERTAIN that the president will have a split congress.

Covid stinks,  but we are not going to do full on lockdowns,  and there WILL (in the markets opinion)  be a vaccine soon.

The economy will recover and so will earnings.

Traders will argue that the market is as high as it is because the FOMC is printing money (it might be).

BUT…

The market seems to know what to do with the Fed as it currently operates.

What will take the market out is what happened in February…

An unknown.

If you look at the history of the stock market,  the times where it has completely blown up have NOT been when it is bad…

…It’s been when the market cannot figure out what is happening in the world.

The Bank Meltdown took a year,  Brexit took 3 days.

When traders lose it is when they overthink things and trade not WHAT IS IN FRONT OF THEM,

BUT WHAT THEY WANT TO BE IN FRONT OF THEM.

In the next week,  I do not know exactly what will happen,  but what I do know is that the fears that I am well aware of are unlikely to cause the S&P 500 to take the dive that some traders are fearful of.

And for those of you who fear who the next president will be, take a look at the stock market over the last 10 years…

Politics rarely drive stocks and volatility for long.

Take a breath and watch market breadth….not a Map on CNN.

Your Only Option,

MarkP.S. – I had a few slots open up for a Little John and since we just finished official week 1 of the 90 day challenge, I decided to give any late comers a shot to get in. So all spots were already taken except for 1. Ends at midnight tonight. You can grab it here.


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