Key Tactical Takeaways:
> With 2 days left in the official Santa Claus rally, SPX is well ahead of the average gain +0.75% since 1993. Pending a close < ..., the POTENTIAL exists for a blow-off rally to between ... and ... to start the year. Beware tomorrow's Georgia Senate election, however, as the market could sour over the tax hikes that would likely come with a Democratic victory.
> After taking a breather in the last couple of weeks of 2020, financials seem to have regained traction relative to the benchmark S&P 500, and appear to be on the verge of moving back into the Leading quadrant to join tech.
> The benchmark 10-Yr yield is about to undergo a key test of its near-term trend strength in the area of ...% to ...%.
> GLD broke above the top of a 4.5-month channel on Friday, opening the door to between ... and ... this week.
> Our IPI long had a big move on Thursday, so profit taking is warranted. Pending a close < ..., however, this long will remain on our trade ideas sheet.
Some Quick Thoughts:
As we leave the nightmare of 2020 behind, vaccines bring hopes of reopening and a return to normal, but the reality is that markets and the world are constantly evolving. That evolution is sure to create alpha opportunities, so we're gearing up to introduce a line of innovative products in the coming weeks to take advantage of this. In the meantime, below is a brief summary of the themes we believe will be key in 2021.
1. Not surprisingly, an unthinkable amount of monetary market manipulation has been a pillar of the post-Covid crisis recovery. As a result, there's a real possibility that structurally higher spending means higher rates and higher inflation. For the bond market to keep signaling that the rotation to higher rates in the 2nd half of 2020 is indeed sustainable, the benchmark 10-Yr yield must stay above ...% in early 2021 trading.
2. The new post-Covid world has come with great technological advancements, resulting in parabolic gains across the tech sector. While the robust demand for investment in AI, automation, and industrial software is likely to continue, an argument can be made that these parabolic gains have extended to the point where.... We'll dive deeper into this in the coming weeks.
3. With a new US administration taking office, there will be no shortage of things to discuss on the policy front in 2021. When it comes to markets, ... investments are sure to be in focus. In addition, as Covid-19 has shown, population expansion throughout the world is paving the way for an increase in ... transmission. Therefore, ... stocks in this arena are sure to attract capital and generate outsized investment opportunities.