By Nigam Arora
Scientists tell us there is still not enough known about the novel coronavirus. Don’t tell that to the bulls in the stock market.
Bulls think they have it all figured out. They’re bullish because the U.S. economy is opening. People are going back to work. The government is borrowing record amounts of money. The Federal Reserve is printing money at an unprecedented rate. Vaccines are moving along. Antivirals are coming.
What is there not to be bullish about, they say?
To start, what about states that are opening up and seeing an increase in new coronavirus cases? This may not matter to them because their new motto is “Money, some liberty and the pursuit of more money.” Please see “Stock market could get spooked if opening the economy means more deaths.”
Anything could happen in science and government that could easily dampen the enthusiasm for stocks.
For example, there is a new coronavirus research paper out: “ Spike mutation pipeline reveals the emergence of a more transmissible form of SARS-CoV-2. ” The mutation is resulting in a higher viral load and the evasion of existing antibodies. In plain English, this means that those who suffered from a different strain may not be immune to the new strain.
We will be seeing lots of news about the virus and treatments and vaccines for it. Some positive, some negative.
On the positive side, the Food and Drug Administration has cleared Moderna’s /zigman2/quotes/205619834/composite MRNA -4.12% Phase 2 coronavirus vaccine study to proceed.
How should a prudent investor put all this together?
Please click here for an annotated chart of the Dow Jones Industrial Average ETF /zigman2/quotes/208954582/composite DIA -0.35% , which tracks the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.35% .
Please click here for a daily chart of the ETF.
Note the following:
• The first chart gives investors a long-term perspective.
• The first chart shows that the stock market has been up against the lower band of the resistance zone for a while.