THE WEEKLY TOP 10
Table of Contents:
1) The stock market: Bullish near-term, cautious for 2021.
2) Many global stock markets look great near-term as well.
3) One concern is that sentiment is starting to get quite bullish.
4) A break above 1% on the 10yr note will confirm a change in LT rates.
4a) That will be bullish for banks...not so much for utilities.
5) Bitcoin: More upside potential, but it will see more very deep corrections.
6) We see more upside potential for the energy stocks.
7) Gold...Sitting at a key near-term technical juncture.
8) Tesla...Don’t forget that volatility is its middle name.
9) 2021 earnings estimates are not enough to fuel a further rally.
10) Summary of our current stance.
1) We are still bullish on the stock market for a year-end rally. We believe that the Fed will keep the liquidity spigots wide open during this new waves of lock-downs, BUT we want to make sure we reiterate that we are much more cautious for most of 2021. Once we get past this most recent wave of the pandemic, we believe the Fed will lighten up on their stimulus (to avoid another major bubble)...and we think new fiscal stimulus (besides the upcoming relief package) will be back-end loaded in future years. With the stock market as expensive as it is, the lower levels of stimulus will create headwinds for stocks much of next year.
2) The liquidity that should be provided during this newest wave of lockdowns will not be isolated to the Federal Reserve. Other global central banks will also continue to do the same...which will help many overseas markets rally further as well. Looking at Japan, India and South Korea, they’ve already made nice “higher-highs”...and Germany, the UK and China are close ...