Issue 51 – Pockets of Speculative Activity

A Snapshot of the Week Ended December 11, 2020:

The S&P 500 pulled back to 3663, registering a weekly decline of 36 points for a 1.0% fall. The market needed a pause to digest recent outlandish gains as Covid-19 caseloads continued to surge and as the employment situation darkened. Since November 2, the S&P 500 has risen almost 11%. Traders felt compelled to manifest their disappointment that Congressmen did not come to some sort of agreement on a stimulus to bridge the economy from virus-lockdowns to vaccine-reopenings. I suspect that many commentators will highlight the lopsided frenzy of the bullish sentiment without regard for values in the IPO, Electrical Vehicle and SPAC segments of the market. Although there appears to be a limitless amount of supercharged money heading towards potentially hyper growth stocks promising that we are going to eat (DoorDash), sleep (Airbnb), move (Tesla), live (FB) and work (Zoom) very differently than we did in the past. It will happen, but overnight? No. At this time, these pockets of position overextension appear to be a by-product of the crowdedness of momentum traders and speculators.


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By Hubert Marleau

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By Hubert Marleau

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