The stock market is mixed this morning with Dow Futures slightly down and S&P 500 Futures slightly up. Traders call it a mixed market and watch for a possible dip, while others are banking an on a bear move. Many Momentum traders are testing the commitment of the markets. Specifically, they are pushing the major indexes to their 50-day moving averages. Long term investors should see this pullback as a buying opportunity.
Overall Market Trend – Slightly Bullish
Apple Stock – Our Stock Pick of The Day
Tech investors have been hurting with the recent dip. We believe the recent dip in Apple stock is temporary. New models are coming in the next couple of months that will bring it back into the $130s.
Readers are asking why the market is mixed and not appearing to go in any direction. The short answer is the uncertainty of the political environment, coronavirus, fiscal policy, Federal Reserve. Each one of these factors appears to be giving us very mixed statements.
Political Environment
Currently, we think President Trump will win. This will be largely good for the economy and the markets. A Biden Presidency will lead to more taxes (his words) and possibly even more spending, which will trigger more taxes. However, the polls are uncertain. Key states to watch are Florida and Pennsylvania.
Coronavirus
All data is showing a decline in both infections and deaths. States that are locked down should be opening.
However, some experts are warning that there could be a new round of infections. Vaccine trial information is expected to be released in October.
Fiscal Policy
Congress and the White House are said to be closed to finalizing a new “Coronavirus Stimulus” bill. It may be included in the new budget, which is expected to pass to avoid a shutdown. Unfortunately, this is an election year, and it would not be expected that shutdown happens for political reasons.
Federal Reserve
The most significant player and savior to the stock market has been the Federal Reserve. In recent months it has infused capital into the banks and bought up Trillions of dollars of securities. Current statements appear neutral on rates, which means they can’t or won’t infuse more capital. Yesterday, some statements were testing the banks and looking for weaknesses in the market.
