President Trump signed the $900 billion-plus, COVID relief package late Sunday night with promises from the House and Senate to make good on a couple of the President’s demands, most chiefly payments of $2000 per person and $600 per child.
Promises from Congress? Not sure LOL is strong enough, even if bolded with maximum font size. Promises from Congress, hahahaha!
House Speaker Nancy Pelosi says she is going to pass the $2k bill in the House but it’s rumored Senate Leader Mitch McConnell is going to kill it in the Senate. I don’t usually get into politics here, but… in my humble opinion, it would be a horrible PR move for McConnell to “be against the little guy”. Nothing like actions that re-enforce Republicans are only for the rich stereotype. I can’t image that it would be helpful for the Republican Senate candidates in Georgia’s January 5th runoff election either.
Yeah, yeah, yeah, “We don’t have the money.” Another bold, oversized font, LOL. That fiscal responsibility horse is dead on the roadside, $29 trillion miles ago. That’s not to say I am pro spend whatever you want, but “we don’t have the money” is just a joke considering the deficit/national debt, accounting tricks notwithstanding, created by teams red and blue.
Nonetheless, Wall Street is the federal money junkie and Uncle Sam is the dealer. Wall Street got their fix when President Trump signed COVID relief bill number two along with the continuing resolution. Stocks gapped higher at the open Monday with the DOW and S&P tacking on a few more points by the close. Meanwhile, the NASDAQ gave back about 25 points of its gains from the opening to closing bells.
The three major indexes finished the day with 52-week closing highs, which is called confirmation. It’s been our experience that stocks continue to move in the same direction when the three agree with simultaneous highs or lows. Odds are stocks will finish a crazy 2020 on a high note in the holiday shortened trading week.
Investors looking to ride the trend to close out 2020 might consider an index, exchange traded fund (ETF) like Invesco QQQ Trust (QQQ).
Although, a few small caveats.
- Holiday trading tends to happen on small volume; so, reversals on light volume can wipe out previous moves on equally small volume.
- If Wall Street believes incoming President Joe Biden will be able to raise the capital gains tax rates and undo the Trump corporate tax-cut in 2021, locking in profits under current tax rates before the year end is a real possibility.
For now, it appears current tax rates will remain the law if Republicans win at least one of Georgia’s two Senate seats. If they lose both, then Vice President Kamala Harris would be the tie-breaking vote in the Senate with corporate and capital gains taxes likely headed higher.
Politics aside, increasing the cost to do business and invest lowers expected returns. We’ll get more into this discussion after the Georgia Senate votes are tallied.
Unlike most weeks, last week’s top performers were not concentrated in similar sectors and industries. Green/renewable energy stocks remained at/near the top of the list, joined by some tech, retail, banking, pharma, and newcomer broker dealers. It’s hard to be a fan of any of the top performing sector ETF charts as all of them appear extended.
A selloff, perhaps major, is coming, the question is when?
Although all of our measuring sticks point to prices most likely moving up in the days/weeks ahead, those overextended ETF charts for the best performers scared us off. However, there is a regional, “better burger” chain that recently came public that appears to offer investors potential, well-above average returns in the next 12 to 24 months.
Keep an eye on your inbox as we’ll be sending info on the hamburger chain a little later this week.