Commentary: Paul Ebeling on Wall Street, Investors Look Past the COVID Chaos

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November will close as 1 of the best months for stocks in history” — Paul Ebeling

What happened last week

S&P 500 and NAS Comp finished in record territory last Friday with the
DJIA +37.90 at 29910.31, NAS Comp +111.44 at 12205.76, S&P 500 +8.70 at 3638.37

The S&P 500 (+0.2%) and NAS Comp (+0.9%) closed at fresh record highs Friday in a shortened holiday trading. The Russell 2000 increased 0.6%, and the DJIA +0.1%.

  • NAS Comp +36.0% YTD
  • S&P 500 +12.6% YTD
  • Russell 2000 +11.2% YTD
  • DJIA +4.8% YTD

The technicals

S&P 500: It gapped higher and rallied past the prior Monday closing high. But missed the intraday high from the Pfizer (NYSE:PFE) vaccine announcement. And Friday closed at a record high.

NAS Comp: Cracked and beat the September high closing in reccord territory 

This month

You might have gleaned that rising coronavirus cases and turmoil atop the government would breed at least the beginnings of caution among traders and investors. Not so.

November is finishing as a historic month for equities, ETFs focused on US stocks were just hit with 1 of the biggest deluges of cash ever recorded, attracting nearly $53-B in November.

The cascade of money explains any number of market trends, not just the strength of gains.

November will end as the 4th-best month for the S&P 500 in 20 yrs.

Investors are viewing this as an opportunity to buy the dip in sectors that have been battered by the medical emergency chaos.

This is likely to continue given that piles cash are still parked in money market funds. Nearly $1-T flooded into the ETFs from February to late May as chaos gripped markets, ballooning US money-fund assets to a record $4.8-T, that pile has shrunk to roughly $4.3-T well above pre-virus levels.

Now, with the end to COVID in sight, we expect that the cash stashed in money-market funds will continue to fuel stocks after months of sitting in money-market funds that yield next-to-nothing investors may be looking to eliminate the cash drag from their portfolios heading into year-end.

This is the time where people are introspective and are saying, “I might have had cash, but cash isn’t the solution long term”

A lot of the moves we have seen is positioning going into next year, almost as a clean Bull slate.

Have a healthy week, Keep the Faith!