February 21, 2021
Weekly Market Outlook
By Keith Schneider
Winter struck in all its glory this past week. Most people, other than parts of Southern California, Arizona. South Florida & Hawaii, felt the sting. Very cold weather mixed with snow, and we all got to feel the wicked deep freeze that often occurs in February.
As you are probably aware, Texas was without power and today has very little clean water. I wonder how those people were able to put in their stock and ETF trades last week?
The cost to charge your Tesla went as high as $900, or what Elon might say… ludicrous mode.
During this rarely seen event; the market went through consolidation, as we suggested might be the case last weekend. There is, however, a much bigger picture being played out here. Equity inflows, small-cap stocks, modern family Biotechnology, and Crypto are all seeing much speculation, attention, and lots of play.
Investors bought $26.5 billion in equity funds last week, marking a tenth straight month of net buying in equity funds, Refinitiv Lipper data showed.
Another example of speculation can be seen in New Issues (IPOs). During 2020 there were 480 IPOs issued on the US Stock markets, a new record and 106% more than in 2019. And this during a pandemic? That was 20% higher than the previous record of IPO’s in 2000, which had 397.
So far in 2021, the estimation is that there have been 160 already. Notice I said since 2000? Does anyone recall that period when if you had a “.com” in the name of your company you could go public even without revenue or earnings?
Also, you may note, that many of the IPOs these past 2 years have had no earnings but have been met with a vociferous appetite by investors whom I will call “speculators”. We all know that you need not have any positive earnings to be a hugely successful stock, so long as your business model, area of endeavor or CEO can talk up why you MAY make billions in the future (i.e., TESLA). Sometimes, it even happens.
Add on top of this Bitcoin hit $57,000 Friday after starting the year at $29,000 a rise of almost 100% in 7 weeks.
Small cap stocks are still on a tear (our Small Cap All-Stars model is up almost 30% YTD), and this adds up to a very HOT Wall Street.
Why you ask?
There are a host of reasons, but I will attempt to add to my thesis from a few weeks ago which discussed in some depth the amount of stimulus in the markets and more on its way. This benefits smaller businesses that may need it the most and will impact their balance sheets more quickly. Here are some other reasons:
Even though I am not a meteorologist, I do know this; the weather will warm up soon, the supply-demand issues will get rectified, and we will see calmer times.
However, the potential rise in inflation and high consumer demand may drive the prices for goods and services higher.
Right now, the monetary cycle we are in is propping up the dollar, interest rates are trending up, and the stock market holding onto most of the gains from the past 10+ months.
We are more confident each day that when the time comes when the speculative fervor subsides, and rising rates will result in a correction or bear market, MarketGauge can and will be your best source for information on how to maneuver in the changing market landscape.
We have taken advantage of the good markets so far in 2021 and most, if not all, of our investment strategies are performing well above their benchmarks. This with us having locked in nice gains on small caps, Nasdaq, Sector ETFs, and a host of Mish’s trades which have seen doubles and some triples in a very short time.
We are honored you are along for the ride (if you are not, what are you waiting for?). We want to help you learn, trade, invest and grow your money tree. Your success is our success, and we are grateful we can help you maneuver the many market opportunities that exist.
Stay tuned for some exciting new developments at Market Gauge Group. We are working hard to make your investing future more successful with less effort, a winning combination.
Here are this week’s latest highlights:
Have a great weekend and best wishes for your trading.