What’s the Next Catalyst for the Market?

Almost every market has recouped at least 50% of its Covid-19 losses. Some markets, like investment-grade credit, have regained at least 80%. So where do we go from here?

If you Have listened to any news source on the last week. You’ll note that Covid cases are on the rise in states that are reopening. Personally, I’m not surprised. I believe their would always be an increase in cases, but after witnessing the public’s lack of respect for the disease I’m not going to be surprised if we need a second lockdown.

I don’t want to get on my soapbox and preach about politics, but there’s a group of Americans that blatantly ignoring basic human decency and are failing to follow any precautions.

I believe this will translate another downturn in the markets. As you can see the VXX has been creeping up while the SPY in bouncing around this no mans land looking for a direction.

VXX

SPY

With this news I’m thinking the reopening will not be as smooth as the market has hoped. Apple just announced they will be closing stores that are in areas where the covid trend is increasing. I don’t think this will be an isolated event and if other companies start closing again that’s going to make a real impact economically.

I’ll be setting up some bearish trades as the science is. It looking great.