Why has the s&p500 already made a full recovery?

[ChiBitCTy]

These are great questions you pose here.  As it goes for the stimulus checks, it's not that people are simply depositing their checks in to the stock market, because they most certainly aren't, but a large portion are using them to buy goods and services which help prop up the stock market of course.  As it goes for the markets in general, I don't see how they recovered so quickly and I've worked in this industry for over a decade.  Time will only tell but I think we're in for a rough road ahead before long.

[StonksStonksStonks]

money printer go brrrr

[jaysabi]

I was just looking at the comparisons of the charts between the dax, uk ftse and s&p500 and it looks like the S&P has has majorly outperformed the others but I'm trying to work out why?

A lot of people seem to think consumers are buying more from larger companies and less from smaller ones and the US government seemed to be doing it's best to bailout everything other countries were competing on (afaik) against it - like they normally do. But it seems weird that part of the market has already fully recovered even though the pandemic is set to continue for quite a while. Did people just deposit their cheques from the government straight into the stock market? Are companies doing buybacks still with their own rescue packages? Or do people wait for a crash before they start investing...

You won't find a concrete reason for this because of how nebulous it is and the fact that nothing is directly cause-effect, but the most likely explanation I've seen has to do with how much money the Fed has created recently to hold down interest rates.  By doing so, it forces the yield on safer investments like bonds and treasuries to near-zero, and because investors want a return on their wealth, it forces them into riskier investments in search of better returns.  In this context, that means exited the now zero-yielding investments and moving into equities.  So although the Fed has not bought securities directly with the money they created, the net effect is to push money into equities as a consequence of printing that money.

[jackg]

I was initially expecting more blood in the real estate market, another harsh leg down to lower lows, sometime this year. On the REIT charts it would look something like 2008-2009. I'm sitting on a lot of cash and ready to pull the trigger if the market were to dip where I'm hoping, but I'm just not too confident in that scenario anymore. The residential market has remained somewhat robust, at least the markets I'm interested in (houses or townhouse style condos in second tier cities or inner suburbs). Now I'm leaning towards rolling that cash back into more liquid investments and putting real estate on the back burner, at least as far as home buying goes. On the business side (commercial warehousing and office space) I'm more confident I can scoop up good value over the next year or two. Residential.....I just don't know.

Last time real estate fell in 18 months after the downwrd leg.

I longed it at the start of the stock market crash - assuming people would be more confident in housing.  I was also under the impression a stock market crash would lower interest rates - and the common knowledge is generally when interest rates fall, house prices go up to compensate for it. Not that it'd do too much now but I could still see people getting remortgage rates at 2% here or something (i've heard 2.6%) - with the BoE interest rate set at 0.5% afaik.

(I longed an ETF I don't think I have the cash for a property portfolio yet).

With stocks and gold at ATHs, and BTC breaking yearly technical resistance...

Personally, I looked at this and thought - why would you sell btc at the moment? (So I guess I know where I sit with that).

I could see the fed just continuing the printing now. If you do cashout, cash to euro or a currency from somewhere like Japan.

You won't find a concrete reason for this because of how nebulous it is and the fact that nothing is directly cause-effect, but the most likely explanation I've seen has to do with how much money the Fed has created recently to hold down interest rates.

Yeah they actually did print $6+ trillion after all... I found it recently when checking something - just the $3 trillion was an immediate injection.

money printer go brrrr

I'm surprised there's no friction burn.

[Chris Svorcik]

The US market did it again. A new high has been reached after price action managed to break above the 3400 on the SP500.

What happened? I'll try to explain the dynamics behind the bullish run and what we can expect next.

I think that uptrend and new high is a combined result:

• Covid new cases are on the decline and hence there are less concerns.
• Elections are getting closer. Trump’s approval ticked up ever so slightly in recent polls and this could provide some optimism in the stock market.
• And finally the trade war showed signals that both sides are still committed to the implementation of the agreement.

What next? The SP500 index has seen a break above 3400. This could lure in investments from the sidelines perhaps (as discussed in a previous article) and could boost the market even higher.

"What If" Scenarios?
All good? Not exactly, we will see a bear market likely before the election takes place, but i'll discuss this in a future posts.

As usual, it’s time to discuss the main question: how should we manage this market with options?

"The trend is your friend" so i want to follow it.

But it is even more important to protect your portfolio with SPY or SPX put or bear put.

[cryptoboss2020]

federal reserve money printing factory started their printers lol:D


 

[exstasie]

"What If" Scenarios?
All good? Not exactly, we will see a bear market likely before the election takes place, but i'll discuss this in a future posts.

As usual, it’s time to discuss the main question: how should we manage this market with options?

"The trend is your friend" so i want to follow it.

But it is even more important to protect your portfolio with SPY or SPX put or bear put.

Bear market before the election? Maybe a brief correction to test the 3,200s or 3,300s as support (maybe a dip lower if Biden is anticipated to win in November), but emerging from a 6-month consolidation to new ATHs screams bull market to me, not bear.

Don't overpay for those puts.

[BrewMaster]

I think that uptrend and new high is a combined result:

• Covid new cases are on the decline and hence there are less concerns.
• Elections are getting closer. Trump’s approval ticked up ever so slightly in recent polls and this could provide some optimism in the stock market.
• And finally the trade war showed signals that both sides are still committed to the implementation of the agreement.

- the new daily cases is not near the ATH (which was 78k) but it is still very high at 44k not to mention that it has been rising over the past week from the lowest at 32k constantly rising. not to mention there is a horrible jump in the number of deatsh from only 430 to 1300 per day!
- it wasn't significant enough to cause this kind of pump in stock market. keep in mind that the economy is still strained.
- haven't been following this but things don't seem to be looking up on that front. both countries are bleeding badly still.

[jaysabi]

when a movement in a market doesn't make any sense at all that always means there is manipulation going on. fake movements always look weird and make no sense.
granted the economy has recovered a little bit and the life resumed but things are far from being normal and certainly not fully recovered with all the money that all these companies in stock market lost in the past couple of months and continue to lose.
there is also another factor that could be the main reason for manipulation. and that is the coming US elections. a recovered stock market, even if fake and in a bubble, looks so much better in campaigns

This isn't true at all.  Just because a market move doesn't make sense to you doesn't mean there's market manipulation going on.  The stock market cannot be explained in a simple two-dimensional way.  There are millions of actors all acting independently and trillions of dollars at play, and neither of those translate into a simple binary explanation (i.e., the market it up because X or the market is down because Y).  The stock market is too complex and vastly too large to be summed up like that all the time, and that's not evidence of manipulation because sometimes it moves in a way that you didn't expect given whatever specific attribute you're keying in on at the time.

[wiss19]

The last statement, yes people do buy and invest when the market crashes. There are lots of investors that are always ready to buy when a market is crashing, these investors know that the market will go back up after a crash, that’s definitely the right time to start investing.

Moreover (I don’t know for you) I wasn’t expecting the crash to last for long. It’s only going to affect the economy at first because lots of companies decided to take a break and the economy was put on hold due to the pandemic. But when the lockdown started hitting them hard they decided to open, and it shouldn’t be a surprise that it’s (S&P 500) recovering.

[jaysabi]

The US market did it again. A new high has been reached after price action managed to break above the 3400 on the SP500.

What happened? I'll try to explain the dynamics behind the bullish run and what we can expect next.

I think that uptrend and new high is a combined result:

• Covid new cases are on the decline and hence there are less concerns.
• Elections are getting closer. Trump’s approval ticked up ever so slightly in recent polls and this could provide some optimism in the stock market.
• And finally the trade war showed signals that both sides are still committed to the implementation of the agreement.

What next? The SP500 index has seen a break above 3400. This could lure in investments from the sidelines perhaps (as discussed in a previous article) and could boost the market even higher.

"What If" Scenarios?
All good? Not exactly, we will see a bear market likely before the election takes place, but i'll discuss this in a future posts.

As usual, it’s time to discuss the main question: how should we manage this market with options?

"The trend is your friend" so i want to follow it.

But it is even more important to protect your portfolio with SPY or SPX put or bear put.

This completely ignores the fact that the market is higher than it was when COVID started but fully 1/5 of the country is unemployed.  No amount of optimism about the COVID numbers getting better (which I don't even think they are in a meaningful way) could explain the disparity considering how much worse the economy is now than at the beginning of the year.  Companies are going to make less money because everyone has less money due to the great drop in gross economic activity, yet the prices of the stocks have gone up despite the expectation of substantially lower earnings.  Improving COVID numbers can't explain that unless you're trying to say that the optimism has temporarily sent people out of their minds with enthusiasm for stocks.  I wouldn't buy that argument.

[wxa7115]

when a movement in a market doesn't make any sense at all that always means there is manipulation going on. fake movements always look weird and make no sense.
granted the economy has recovered a little bit and the life resumed but things are far from being normal and certainly not fully recovered with all the money that all these companies in stock market lost in the past couple of months and continue to lose.
there is also another factor that could be the main reason for manipulation. and that is the coming US elections. a recovered stock market, even if fake and in a bubble, looks so much better in campaigns

This is another possible explanation for what it's happening, the US elections will come very soon and we know that one of the surest ways to lose the presidency is to have a crashing stock market, and it is possible that the president did everything that he could to change this and manipulated the markets so they look more robust during the elections.

However while this solves the issue with the stock market it doesn't really help the real economy which as we know it is suffering greatly because of the impact of the coronavirus and the tens of millions of jobs that were lost in the United States during the pandemic and many of those that have lost their jobs will probably blame the president because of it putting into doubt if the manipulation exercised in the stock market is going to be enough in order to assure victory in the elections.

[exstasie]

However while this solves the issue with the stock market it doesn't really help the real economy which as we know it is suffering greatly because of the impact of the coronavirus and the tens of millions of jobs that were lost in the United States during the pandemic and many of those that have lost their jobs will probably blame the president

That's why the administration was so intent on not continuing the $600 per week unemployment benefits, and pushing so hard for a payroll tax reduction. They want to bolster employment numbers any way they can, so they want to disincentivize people from collecting unemployment (paying them less) and incentivize them to work (taking less taxes away from their paycheck). Not to mention the way they fudge the numbers with misclassifications to make the unemployment rate look lower than it really is.

The rate barely improved from June to July, and the weekly claims numbers have spiked up again. I think the August jobs numbers will be sobering. They might provide a good excuse for a dip. With the S&P 500 flying so high above the fast moving averages, a scary shakeout almost looks inevitable.

[DaveF]

Starting with IMO.

One of the main reasons for the S&P (and DOW and every other thing) is due to the fact that since the administration put a hold on evictions and repossessions and a lot of banks & mortgage companies were willing to allow you to skip payments there are a lot of people who were still working, earning their full salaries who decied to do it. And now their biggest expense, their mortgage is no longer there for 6+ months they invested their money.

Just my view, could be 100% wrong.

-Dave

[jaysabi]

when a movement in a market doesn't make any sense at all that always means there is manipulation going on. fake movements always look weird and make no sense.
granted the economy has recovered a little bit and the life resumed but things are far from being normal and certainly not fully recovered with all the money that all these companies in stock market lost in the past couple of months and continue to lose.
there is also another factor that could be the main reason for manipulation. and that is the coming US elections. a recovered stock market, even if fake and in a bubble, looks so much better in campaigns

This is another possible explanation for what it's happening, the US elections will come very soon and we know that one of the surest ways to lose the presidency is to have a crashing stock market, and it is possible that the president did everything that he could to change this and manipulated the markets so they look more robust during the elections.

However while this solves the issue with the stock market it doesn't really help the real economy which as we know it is suffering greatly because of the impact of the coronavirus and the tens of millions of jobs that were lost in the United States during the pandemic and many of those that have lost their jobs will probably blame the president because of it putting into doubt if the manipulation exercised in the stock market is going to be enough in order to assure victory in the elections.

The president doesn't control the Fed, and the Fed acts independent of the president's desires.  The Fed can't risk being political because the only thing that gives the US dollar value is the widespread acceptance that it has value.  It's a self-fulfilling prophecy.  If the Fed begins to make political interventions, faith in the dollar will collapse and so too will the US economy as a result of having a worthless currency.  So no, the stock market isn't doing well because there's a US election.  It's because the Fed is pursuing other mandates and the consequences of those actions is pumping cheap dollars into the economy, which have nowhere to go but the stock market (essentially).

[int03h]

This number only does not mean to this time because they have a discerning the law. Disease emerges and is worth a plunge because it cannot produce and create more value. The market goes up means we are manipulating or that society has a surplus of cash.

[el kaka22]

Well, the reason is because those companies lost a certain amount of money (and will lose) because of pandemic but they also got a lot of money from the government in handout form (called bail outs most famously) and they also got loans that are so cheap that it might as well be interest free and it is so long that basically it is like giving someone a billion dollars paid in a million dollars per month for the next god knows how long and just get 1.1 billion back instead. Even inflation is better than that.

So, yes companies were in a bad situation but government found a way to keep them up by screwing everyone else in the country, not a good method but there was nothing we could do to stop them so we ended up with companies saved before humans.

[Mauser]

Well, the reason is because those companies lost a certain amount of money (and will lose) because of pandemic but they also got a lot of money from the government in handout form (called bail outs most famously) and they also got loans that are so cheap that it might as well be interest free and it is so long that basically it is like giving someone a billion dollars paid in a million dollars per month for the next god knows how long and just get 1.1 billion back instead. Even inflation is better than that.

So, yes companies were in a bad situation but government found a way to keep them up by screwing everyone else in the country, not a good method but there was nothing we could do to stop them so we ended up with companies saved before humans.

Don't forget that most of the big companies received financial aid from the government, this means they have to fire less people and more people receive their monthly wages. For the government it's easiert to give money to the big corporations than send every person a check home. As the more people are in employment will keep the economy running. The real problem comes when people stop spending and save almost all of their wages. With less money in circulation we will see the companies have to cut back eventually which will just make everything worse. It's a downward spiral which so far didn't start yet to a full extend. That's why the stocks are doing so good.

[jaysabi]

Well, the reason is because those companies lost a certain amount of money (and will lose) because of pandemic but they also got a lot of money from the government in handout form (called bail outs most famously) and they also got loans that are so cheap that it might as well be interest free and it is so long that basically it is like giving someone a billion dollars paid in a million dollars per month for the next god knows how long and just get 1.1 billion back instead. Even inflation is better than that.

So, yes companies were in a bad situation but government found a way to keep them up by screwing everyone else in the country, not a good method but there was nothing we could do to stop them so we ended up with companies saved before humans.

Don't forget that most of the big companies received financial aid from the government, this means they have to fire less people and more people receive their monthly wages. For the government it's easiert to give money to the big corporations than send every person a check home. As the more people are in employment will keep the economy running. The real problem comes when people stop spending and save almost all of their wages. With less money in circulation we will see the companies have to cut back eventually which will just make everything worse. It's a downward spiral which so far didn't start yet to a full extend. That's why the stocks are doing so good.

This can’t be the reason. There have been real and pronounced declines in the economy despite government attempts to stimulate. Companies are less profitable now than they were pre-covid (in aggregate, there are certainly some individual winners in this) but stock prices have continued to go up. So there is a disconnect between earnings and stock prices.

What explains the disconnect is the liquidity the Fed is forcing into the market. It’s forcing yields way down and forcing stored wealth to chase returns elsewhere, in this case equities. That’s why prices are rising while the economy is in tatters.

[bitgolden]

I hate it when governments tell companies "you didn't made a profit like you imagined you would?
Here is the money you would have made anyway" and just help them out. And the sick and horrible thing is, people, I mean literally humans, getting money because they need to survive from the government and companies (well CEO's) say that why should public get money individually when company doesn't?

They keep saying that if they do not, they would bankrupt, I am sorry but what type of company bankrupts after few months of not working? Have they never invested or saved a single cent in that company?

Are they spending more than they are making every single day? If you run a business that can't stop for 3 months, you deserve to be bankrupted, and if you think people and companies are equally important to save, you are a sicko as well.