“November is shaping up as 1 of the best months for stocks in history” — Paul Ebeling
You might have surmised that rising coronavirus cases and turmoil atop the government would breed at least the beginnings of caution among traders and investors. Not so.
In what is shaping up as a historic month for equities, ETFs (exchange-traded funds) focused on US stocks were just hit with one 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 could easily be 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!