The Stock Market grinding higher, Buoyed by Cheap Money
Major indices continue to defy expectations, printing higher, relieved that the Reddit-pumped mania has subsided, tagging along with normalcy. Although the NASDAQ failed to register higher highs, decent gains by the S&P 500 is a boost for traders of whom some are retracting, citing an overheating market fanned by cheap money.
Analysts postulate that the stock market loves symmetry. Accordingly, sharp spikes like GameStop's and AMC's are destabilizing. Their inevitable crashing, therefore, was expected. However, the subsequent relief accompanying the popping of the bubble drained market-wide fear that the bubble might "infect" the stock market. The reassurance that comes with normalcy helps realign bulls back on track, driving major indices higher. Of note, the upswing is from ravaged stocks that are now bouncing back as the government steps up vaccination and introduces measures to support affected businesses.
Impact on Indices:
Bullish. There are inflation concerns that will retract back to normal levels in the medium term. However, the overarching importance is whether the stock market will squeeze maximum juice from the current recovery. FAANG stocks may be neutral, slightly shaving gains. But as long as they tread water, the current indices' leg up will continue despite overvaluation fears.
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