Making Sense Of The Bull Rally

It was easy to hop on board the ‘bull-train’ coming off post Coronavirus lows, but how strong was the foundation of the run built on? Clearly, the Street is very optimistic of the recovery process and we saw that reflected in the majority of prices across all sectors.

Yes, the Street are forward thinkers. Yes, we saw prices that reflected 6-8 months ahead. That being said, no one has a crystal ball; despite the confidence of many on the Street.

Regardless of your opinion, (and make no mistake about, the market can careless about your opinion) prices were pushing higher. Stubborn shorts were getting squeezed on another level. Attempting to catch the top is and will always be a fool’s game; make your trading life much easier and let the boys print it first and then ride their wave.

Did the increased prices make sense with the reality of Main Street? The fact of the matter is, many small businesses did not re-open their doors – that was the harsh reality of far too many. Too many of them were already living week-to-week and the quarantine period had literally crippled their bottom line – they were left with no choice other than close up shop; for good.

Those that were frivolous with their spending, paid the ultimate price. Poor business money management required so many small business owners to ‘face the music’. The unfortunate reality behind these types of tough business decisions, is they affect not only the owners, but their employees; hence the record level of 30+ million unemployment cases which was seen across the states.

The country has since bounced back – not completely, but certainly we are all seeing signs of strength across most sectors of business. That said, unemployment number remain a major concern, despite recent better than expected numbers, will there be enough money from citizens to spend on Main Street?

Yes, the country is now open for business, but will we have the customers continue to walk through the door eager to spend money they don’t have? Are we there yet? Are we over the uncertainty? That’s the elephant question in the room.

With what we’re seeing today in the market, the answer to these looming questions is, yes; according to the Street that is.

Whether you feel the same or not, is completely irrelevant. All you can do as traders, is trade what you see happening, not what you think should be happening.

That is perhaps the key take away here – your opinion truly is irrelevant in the grand scheme of things. Of course, your opinion may be accurate, but at the end of the day, does that truly matter to anyone other than you? Nope. That’s the reality.

As traders, market perception is all that matters. What you personally feel about the price of a particular security is irrelevant – it’s what the market perceives the price should be – that is what matters. And that is what you must focus on; keep things simple and avoid trying to force your opinion onto the market, because the market always wins. It is far more advantageous to flow with the Street, than it is to fight it.

Stay focused and Trade Smarter.

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