Another short four-day week is behind us. The big issues of the past week have remained partly the same. The complex Covid-19 pandemic, the US (and world) economy on the brink of a (supposedly) deep crash and the radical restructuring of US policy from the last four years.
The pandemic has long become an everyday topic, with reports about the effectiveness of vaccines and supply problem in various geographies. We have the feeling, that the population has gotten used to the “new normal”. Even during these times, speculators are not driven out of the markets. More and more people with small budgets seem to smell an opportunity to make big money from events surrounding GameStop & Co., with a gold-digger mood seeming to have spread among stimulus recipients. Cheap money seems to increase moral hazard.
As a result of this market behaviour, last week the VIX (fear and greed index) went below the much-watched 20 level for the first time in almost a year, only to quickly settle back above it. This movement appears to be random, but it describes a pronounced uncertain behaviour of market participants that we will continue to observe routinely. The cold spell in parts of the US, especially in Texas, left oil and gas production largely idle, causing serious supply shortages. At the same time, the prices of industrial metals jumped in the hope of a strong economic recovery. Hand in hand with this development, interest rates on 10-year US bonds jumped to their highest level in a year. These events provoked new inflation fears among market participants. Gold was the loser of the week, closing with a price of -2.08%. The S&P500 ended the week in the red as well, declining by 0.84%. The unexpected rise in the unemployment rate and the emerging inflation fears intensified investors’ anxiety to such an extent that they could no longer put other negative news into relative terms. ONE SIGNAL delivered long signals during the week, however lost only 0.27%.
Greed and fear are two fundamental emotions that reign the markets. We are currently experiencing a (short) period in which fear is growing and leading to more uncertainty in the stock markets. ONE SIGNAL monitors the emotions of market participants very closely so that we can anticipate all significant movements wherever they may occur. ONE SIGNAL precedes the market and does not wait until a trend has set. ONE SIGNAL is smarter trading.