It is a battle of the bears and the bulls as the S&P 500 remains in a month-long plus trading range.
Since that initial pop off the March 23rd lows, the S&P 500 has lived in a 2795 to 2935 trading range. The bulls see a quicker return for the U.S. economy and the amount of stimulus being pumped into the economy.
Yet, they cannot overcome that 2935 level. It has been touched numerous times just for the market to sell off. The bears on the other hand, see a slower return for the U.S. economy and the awful economic data. Yet, they cannot get below the market below 2795, as that too has been touched numerous times, just for the market to move higher each time.
So as the market consolidates around this trading range of 2795 to 2935, we wait to see who wins the battle. Can the bulls and the record amount of stimulus push the market above the top end of the range or can the bears move the market to break below the bottom end of the range. The challenge is having your portfolio appropriately positioned for either possible outcome.
As I mentioned in last week’s video, the answer may ultimately depend on how many of those lost jobs come back. We have lost over 36 million jobs since the Covid-19 outbreak. As cities and states start to reopen, we should start to get a sense of what the labor market will look like and maybe as that starts to become clearer so too will the outcome of this bulls versus bears battle.
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