The markets today, June 19, look set to open positive as all major indicators are in the green. (Indicators can – and sometimes do -- swing back and forth between red and green during the runup to the opening and back and forth during the day, as occurred yesterday.)
Today, watch for what happens with the quadruple witching which will add to the market’s concerns about flu crisis recovery and recessionary concerns. Put simply, quadruple witching occurs on the third Friday of March, June, September December and today is the first one since the crisis erupted. It refers to expiration of single stock options, some futures, some index options, and some stock futures. As well as its immediate importance, today’s witching can be viewed as a prelude to new quarterly reports scheduled for July.
We won't know until we get to the destination, but it is possible that today’s witching will lead to further turbulence. Most of the uncertainty, however, appears to have been priced into stocks already. To the extent that it happens, it’s one more ingredient in the continuing volatility. And as always, many observers will be looking for clues in Federal Reserve Board Chairman Jerome Powell’s address to the Federal Reserve Bank of Cleveland
In the bigger picture, let’s consider that many old-time rules are becoming irrelevant. Did somebody say, ‘Sell in May and go away’?
Let’s bury that maxim permanently.
As the volatile Summer continues shaping up and we very gingerly tip toe through the recovery, we face a list of uncertainties for which resolution will affect stock markets and therefore investors and I will deal with some of them in future reports.
These uncertainties remain unclear currently but bear monitoring. They include: whether there will in fact be a second wave of the virus, as many are predicting, and even the spikes in the current outbreak, the extent to which the work-at-home trend continues and whether that answer will have any real impact on Real Estate Investment Trusts (REITs). Let’s also watch for the extent to which millions of workers will get their jobs back since it’s difficult to believe that the recovery in the job market will be anything but slow. As an extension of the job picture, we need to know the extent to which consumers will resume normal spending habits (certainly not immediately) and to which grocery stocks can continue their elevated sales, which in many cases were boosted by customers stocking up in fear of shortages. We also need to know the extent to which smaller businesses can survive, the changing healthcare and homecare sectors in a post-crisis environment, the resolution of changes in supply chain strategies, the extent to which retail businesses navigate the social distancing mores that will continue during and after the recovery and the extent to which the travel industry can recover – or whether it has had what one analyst referred to as ‘Armageddon’.
And finally, it would be comforting to know how central banks can unwind their massive money-printing without rocking the markets at some future date.
And that’s just the recovery list of questions. There are others!
Every individual and every portfolio is different, but it may be appropriate to consult your financial advisor about your exposure to any of these factors.
Disclosure: I am not -- and have never been – a licensed financial advisor and have no business affiliation whatsoever with any advisory firm. Nor do I receive any fee income of any kind from any advisor firm. My suggestion that readers consult their advisors flows from professional interviews with approximately 300 advisors in four countries over the years. Every profession (including my own field of journalism) has some less-than-ideal practitioners but the vast majority of advisors try very seriously to deal with their clients’ financial health.