This is a unique period for financial markets, not only surrounded by a wall of concern, but a trifecta of inflection points that can feed off each other in the coming months and is sure to provide turbulence for investors .
This is a summary of the outlook for Wall Street introduced by BTIG researchers in a report featuring chief equity and derivatives strategist Julian Emanuel and equity strategy partner Michael Chu.
BTIG strategists wrote, “We are living through three changes, reminding us in a period of high fluctuations that the path to long term is of short duration.
The researchers said that the three changes coming to the market are as follows:
- Political: Joe Biden was inaugurated on January 20, 2021.
- Viral / social: Coronavirus vaccine news expects the world to return to “normalcy” by the end of 2021.
- Genetic: Price increase
In fact, they note that the transition to a new presidency under former Vice President Joe Biden, therapy for COPID-19 and market reaction to news of progress on potential vaccines and beaten-down price stocks became more popular The technology-related name, expected to be out, remains a horny nest of potential challenges that will require fleet navigation.
Read: Trump is not going quietly and fiscal stimulus will not come easily, but investors have big things to worry about.
The Russell 2000 index ended Friday trading at an all-time high, marking its first such record since August 2018, and achieved those plaques by dazzling outperformance against its big capitalization peers on the week. did. Russell 2000 Index RUT,
The week rose 6.1%, while the Dow Jones Industrial Average DJIA,
The Nasdaq Composite Index comp gained 4.1%, the S&P 500 index rose 2.2%.
It declined 0.6% in this period.
Also, popular value exchange-traded funds, iShares S & P 500 Price ETF IVE,
Outperformed its Growth ETF counterpart, the Eicher S&P 500 Growth ETF IVW,
According to Dow Jones market data, it has the largest outperformance since March 2009, with 5.86 percentage points and its second largest weekly outperformance on record.
So how right is the way forward?
Emanuel and Chu advised to reduce development risk by opportunistically using an “epidemic” to buy put for “Invesco QQQ Trust QQQ”.
That tracks the Nasdaq-100 index NDX,
In large capitalization shares. The pair recommend selling and buying calls on the Eicher Russell 2000 ETF IWO,
For a caller, and prudently looking to identify stocks that may benefit from technology-related large-cap Nasdaq companies out of and rotational shifts and in value-oriented small-caps.