WKLY ROUND-UP Thru Jan 29th 2020; Reddit Raiders Attack!

Hey Folks, markets are pulling back in the first trading month of January to finish in the red as Volatility comes back into price movement. I see this initial move lower continuing into February as traders take profits as Q4 Earnings continues...get my take on the current markets in this week’s update.

Weekly Sound-Bites:

• Major indexes declined sharply for the week amid much higher volatility and trading volumes. Large-cap indexes generally held up better than mid- and small-cap shares...Despite a busy earnings week in which 37% of the S&P 500’s market capitalization was due to post quarterly financial results, unusual fluctuations in the prices of certain stocks that are popular with individual investors appeared to drive the market and received the bulk of media attention. Encouraged by message boards on Reddit and other online forums, these investors seemed to collectively target stocks with high percentages of short interest through buying the shares...smaller retail traders are now accounting for more than 20% of the trading volume and when they concentrate on a few stocks, like GME, then they can make a difference...and daily option trading Volume has more than doubled since 2019 led by these same retail traders...
• Amid the dramatic swings caused by short squeezes, the Feds January policy meeting took a back seat in terms of market focus. In the FOMC’s statement and in Fed Chair Jerome “Power Ranger Boom Boom” Powell’s post-meeting press conference on Wednesday, policymakers reinforced the message that the economic outlook remains uncertain and that it will be some time before the central bank begins to taper its asset purchases. The government also reported that overall economic growth slowed considerably in the fourth quarter...GDP grew at an annualized rate of 4.0%, in line with expectations, compared with 33.4% in the third quarter...
• Yields on intermediate- and long-term Treasuries decreased slightly for the week. The yield on the 10-year Treasury note briefly reached 1.0% on Wednesday, benefiting from its status as a safe-haven asset amid the sharp drop in stocks, before increasing to finish the week. (Bond prices and yields move in opposite directions.) The municipal bond market produced relatively strong returns for most of the week. The constant demand for yield drove interest in municipals while supply underwhelmed, leading to a supportive technical environment...According to the firm’s traders, investment-grade corporate bonds were pressured in response to concerns surrounding coronavirus vaccine distribution and the status of fiscal stimulus...
• European shares fell amid worries that the economy could slow due to the raging coronavirus pandemic and delays in the distribution of coronavirus vaccines...the European Commission said it would implement a mechanism allowing European Union (EU) countries to block exports of vaccine doses if their purchase orders had not yet been fulfilled while countries remain in lock down mode... Germany, France, and Spain reported relatively resilient GDP numbers for the fourth quarter, spurring hopes that the eurozone might avoid a deeper recession...
• Chinese stocks recorded a weekly drop amid fears that the country’s central bank was turning more hawkish after it drained USD 12.1 billion in liquidity from the financial system and a senior central bank official warned of potential asset bubbles... China reported that industrial profits rose 20% in December from a year ago and increased roughly 4% for the full year after a slight decline in 2019. Next month, China celebrates its weeklong Lunar New Year holiday, albeit with tighter restrictions on traveling and gatherings as officials try to contain new virus outbreaks...

Weekly Round-Up;

Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !

hpb