Broker Check

NEVER forget...

| September 11, 2020
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It is difficult to believe that today is the 19th anniversary of 9/11. Our thoughts and prayers are with the friends & families who lost loved ones. 


The market fell 10% off the high a few days ago and appears like it wants to move lower with first support at the 27,000 level and then the 26,300 level. Leading the way down has been the FAANG stocks (Facebook, Amazon, Apple, Netflix, and Google. The sell-off did not come as a surprise simply because almost every indicator we monitor has been screaming “over-bought.” We knew this was coming, we just didn’t know the precise day.

Of course, many stocks/sectors have enjoyed a phenomenal rally over the past several months and it looks as though they simply became too over-valued and it was time for a breather. What is yet to be determined, is will a 10% breather be enough or will this down move gain additional traction. The big question is, how far will the Fed allow the markets to fall given they have jumped in at just about every market pull-back for months now.

We mentioned, the FAANG stocks above but, Tech, in general, and other stocks primarily on the NASDAQ Composite Index have been leading the market upward at a much greater pace than the other indices and conversely, will be the one to watch in finding its footing (which has support around 10,000).

Based on the uncertainty with the COVID virus, the economy, and the upcoming election, we have maintained a much higher than normal level of cash, being most reticent to implement any long-term strategies at this juncture. Preservation of capital is tantamount for now and be assured, there will be some great opportunities at some point.


The Fed has taken Keynesianism (this policy calls for the government to be much more involved in the economy) to the outer limits of monetary policy. As we have previously mentioned, back on 08/09, the government implemented “quantitative easing” with the infusion of “billions” and today (with no fancy name) are injecting “trillions” into the economy. Many analysts believe more economic woes are on the horizon due to the plight of the small business sector of our country.

In my humble opinion (and other analysts) the current political administration will do all in its power to prevent the markets from experiencing a dramatic sell-off, especially so close to the election. However, we have great concerns about what happens following the election. No matter which party wins (and if it becomes a protracted event to settle), it appears there could possibly be an “explosion” of civil unrest and political turmoil.

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