The Top Three Market Movers for 2020’s Final Trading Week

Editor’s Note: Let’s kick off the final trading week of 2021 with Chris’s top three market drivers. All of these factors have potential to move the market. So, let’s get to it…

Every Monday, I like to take some time to assess the market’s landscape to determine where it’s headed for the week.

This week, as you know, is different than most. It’s the last trading week of the year, and the market is closed on Friday due to New Year’s.

The week may be shortened – but, in true 2020 fashion, there are still a ton of factors driving stocks all over the place.

And there are three market movers shifting to the top of my list right now.

These three factors have the potential to shoot the market higher or lower – and as they do, they could reveal some big-time trading opportunities.

Here are the top three market movers to expect this week…

1. Fiscal Stimulus

We’re all getting sick and tired of hearing the politicians banter abut the fiscal stimulus program. We were told that a deal was done last week, but President Trump suddenly threw a much-larger number into the mix as he threatened to veto the current bill.

The Fiscal Stimulus fiasco is going to pull the market all over the place this week until we see some conclusion.

For the most part, the only areas of the market that will be affected are silver, gold, and the miners along with Bitcoin. That’s right, Bitcoin is susceptible to some selling until a real deal is passed since a lot of traders have been using this as a hedge against the lower dollar.

Hang tight on selling anything that has to do with these groups. We’ll see a fast rebound as soon as the deal is done.

2. Earnings are on the Horizon

The financials are about two weeks away from earnings. That’s right, earnings season is right around the corner, and we’ve not heard any speculation about how the season will kick off.

Last week, the financials got a boost as the Fed allowed banks to restart their share buyback programs. The move didn’t help the financials break into a new rally though, as the Financial Select Sector SPDR Fund (XLF) continues to trade in a tight range near its 52-week highs.

Here’s the rub. The financials almost always see a “buy-the-rumor” rally during the first week of January, followed by a “sell-the-news” selloff in late January. You remember this pattern, right? I talked about it last week.

Get ready for this seasonality to start kicking in, as we’ll see companies like Morgan Stanley (NYSE: MS) – which is one of the Best in Breed stocks in the sector – break to $75 before falling back to $63 by February.

There’s a trade here, and we’ll nail it down as it approaches. Stay tuned.

3. Market Sentiment

Whether you’re watching the CBOE Volatility Index, Investors Intelligence’s weekly bull/bear poll, or any other sentiment gauge, they’re all saying the same thing: this market is a little frothy.

We’ve spent the last few weeks recommending to close out some amazing gains in my Strikepoint Trader research service as the market has gone “next level.” On December 22, in fact, subscribers had the chance to book three 100%-plus profits. Learn how to share in the gains right here!

That said, this market could use a good 5-10% correction.

My indicators and charts are pointing to an early January pullback. This coincides perfectly with the Senate Runoff race that is going to happen in Georgia on January 5.

Here’s what we’re watching for…

A win for both democrats in the race is likely to draw sellers into the market instantly, as we adjust to the idea of a complete democratic slate for the next two years. Anything outside of that will see gridlock in D.C. – which means the markets will be happy and ready to move higher.

We’ll cover these developments with more detail next week, but this is certainly the 800-pound elephant in the room.

And that’s what to watch for this week. Keep an eye on your inbox – tomorrow, we’re talking technicals!

Until then,

CJ

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