Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Stuck In A Lifeboat With A Peloton Bike

By MarketPulse (Jeffrey Halley)Market OverviewJul 10, 2020 04:01AM ET
www.investing.com/analysis/stuck-in-a-lifeboat-with-a-peloton-bike-200530305
Stuck In A Lifeboat With A Peloton Bike
By MarketPulse (Jeffrey Halley)   |  Jul 10, 2020 04:01AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The COVID-19 hand-wringing is out in force again overnight, with North American markets mostly giving back the previous day’s gains across asset classes. Contrast that with Wednesday, where all was light and sunshine, having endured another end-of-days COVID-19 session on Tuesday.

As the dust settles on this week, I can’t help but feel a little emotionally exhausted. It is quite difficult telling everybody to calm down, when the world’s assembled financial press and the army of commentators insist on charging between hope and destruction on a rolling one-day basis. It is perhaps symbolic of today’s hyper-connected world, with its instant dissemination of information, short attention spans, and the need to try and analyse to death, every last tick movement for implications that are probably not there.

I will, therefore, unveil a seemingly long-forgotten concept to readers today—the sideways market. Over the course of this week, with a lack of new underlying macro drivers, some markets have gone up a bit, some have gone down a bit. Readers may use the word consolidation if that makes them feel better. With some notable exceptions, that is pretty much how history will describe this week.

Consolidations, of course, are usually sideways price action before significant omni-directional moves. However, consolidations can last quite some time. We’re all going to get very tired, very quickly expending emotional energy seeing conspiracy theories where there are none on a 24-hour rolling basis.

As to which direction equities, that most schizophrenic of financial markets are heading next, I know not. There are plenty of reasons to be bullish stocks and bearish stocks. In the bigger picture, though, one must keep one’s eyes on the prize. The world’s central banks, via bottomless monetary policy easing, have investors backs. The S&P 500 could easily drop 20% from these levels and still be in a bull market. If you are a Fibonacci freak, you would argue that number was 38.2%.

Daily S&P 500 Chart
Daily S&P 500 Chart

When Adrift, Save Energy

Look at it this way. You are adrift on the ocean in an open-topped lifeboat with only a Peloton Bike and no food or water. As boredom sets in, because nothing is happening and you don’t have your phone, you decide to stay fit and bash out a 30-kilometre sprint session with your favourite instructor, Brutus. There are two reasons you shouldn’t do this. One, you don’t have any Wi-Fi, so you can’t connect with Brutus anyway. Secondly, the rescue could be some time away, and you don’t have food or water. Burning up calories and fluids needlessly in this context is, frankly, dumb. You’re going to get skinny and tanned on a diet of hand caught raw fish and unrelenting sun anyway. Push the Peloton (NASDAQ:PTON) over the side and conserve your energy.

That isn’t to say there are no exceptions, and fascinating ones they are as well. Gold has managed to maintain its hold above $1800.00 an ounce this week. A weekly close above this level would be a very positive technical development. This isn’t an inflation hedge as so many are proposing, this is a real negative interest rate hedge.

China Markets Sizzle

Chinese investors are smiling on the mainland this week as well. No amount of sanctions noise from Washington DC can keep the Chinese retail investor down, when his or her government effectively spent last Friday and Monday telling you to get limit long now. The leading Chinese exchanges were all sitting on weekly gains of around 10.0% this morning, and Hang Seng has gained 4.50% over the same period. Vietnam, by association, has also quietly gained over 4.0% this week. The rest of the world, though, mostly sits in a 2.0% range either side of zero. Not earth-shaking at all in volatility terms for 2020.

One exciting development I do note overnight, is that the S&P 500 and Dow Jones fell overnight, but the NASDAQ rose. Much of the China mainland rally this week has also been concentrated amongst tech companies. The government is promising to spend mega-big in the coming years on the sector. Are tech stocks—including my favourite gangsta rappers, the M-FAANG+ group—the new safe-havens? With their seemingly COVID-19 and economic cycle immune business models. I will ponder this more as I conserve energy over the weekend.

Asia’s session today is a muted one, with Singapore on holiday for its national election. After steady US jobs data overnight, the data calendar today is thin in Asia, and strictly second tier in Europe and the US. That leaves the short-term markets vulnerable to sharp headline-driven moves. Just remember what I said about conserving energy.

Stuck In A Lifeboat With A Peloton Bike
 

Related Articles

Boris Schlossberg
The Hundred Year Portfolio? By Boris Schlossberg - May 07, 2021

Diversifying by market regime rather than asset class The “Moneyball of Money” approach Challenges for the DIY investor In part one of our analysis of Chris Cole’s appearance on...

Jeffrey Halley
Non-Farms Is A Crowded Trade By Jeffrey Halley - May 07, 2021 1

Friday is finally here, and with it the week’s data highlight, the US Nonfarm Payrolls. It has been a choppy week of trading across most asset classes. As the dust settles,...

Stuck In A Lifeboat With A Peloton Bike

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email