ZeroHedge sarcastically wrote about a very odd pattern emerging in the stock markets this year. Something which nobody has noticed except the big boys at Goldman Sachs very recently.
You need to see it for yourself to believe it, so here’s exactly what’s going down…
“Over last eight months, the SPX has rallied 36%, but on an unusual schedule: essentially all of the upside has happened outside of US trading hours (+38%), and on Mondays and Wednesdays (+31%).”
(i.e. When the stock market is NOT within the normal US trading hours of 9:30am EST to 4pm EST, that’s when the rallies take place.)
“Most of the overnight moves have happened in either the post-close/Sunday evening period (+11% before 9 PM, which includes many earnings announcements), and in the period when Europe is open and the US market has not opened yet (+17%)…
…the S&P 500 has risen just 30 points during the day session and a stunning 954 points from the close to the open… the majority of all those gains occurs between 2330ET and 0330ET.”
While numerous technical factors can explain this, one interesting observation is how the release of select news stories has changed the momentum of the market.
Bad news about COVID-19 and the pandemic tend to get released during normal trading hours. However, news surrounding the development of the COVID-19 vaccine and earnings from major companies were released outside of those trading hours. For instance, Pfizer’s COVID-19 vaccine was approved by the FDA last Friday night.
This leads to the writers at ZeroHedge proposing the following strategy, based on these observations:
- Put on your pants
- Sell the cash market open on the US market
- Buy the cash market close on the US market
- Rinse and repeat
Obviously, DO NOT DO THIS! This is a temporary pattern that does not always work and was very specific to this year’s rally following the market lows in March, right around when COVID-19 was announced as a global health pandemic.
But once in a while, it’s very interesting to see all the weird ways in which the market behaves and the odd trends that result from breaking news stories directly affecting the future of America’s economy.
Food for thought!
What other weird stock market patterns have YOU noticed emerging from the American financial markets this year? Reply to this newsletter and share what you have seen – nothing is too weird to leave it off the table!
Promises of Vaccine Success and Stimulus Packages Boost the Markets!
Yesterday’s stock market performance finally reversed the past few days of downward momentum, fueling the belief that December will be the month where we can hopefully keep some of the gains made from the 9-month-long market rally.
Here are the most important numbers you need to know about:
- Dow Jones: +1.1%
- S&P 500: +1.3%
- NASDAQ: +1.3%
The major news event driving these gains was further progress made in negotiating the final details of the second stimulus package. So far, it appears as if the original $916 billion plan is being divided into two separate bills. From CNBC:
“The new plan calls for $748 billion in spending for programs that are popular on both sides of the aisle, including small business loans, unemployment insurance, vaccine distribution, education and rental assistance. A second $160 billion bill would include the more contentious areas of business liability protections and financial aid to state and local governments.”
And as a minor event, the FDA endorsed the COVID-19 vaccine from Moderna as safe and effective, two days in advance of the formal meeting where it will be decided if the vaccine gets “emergency use approval” status.
We still have 3 days left to go for the week and anything can happen in the markets. Be prepared for more breaking news this week!
December 31st, 2020 Is an ESSENTIAL Deadline for Your 401(k)!
The end of the year is fast approaching, and so are the critical deadlines for those of us in the finance industry. In particular, December 31st signifies two very important milestones for the average investor.
First, it is the deadline for you to make your FINAL contributions towards your 401(k) as they will also count towards any deductions you get when your tax bill arrives in April of next year. This is different from an IRA, where the deadline to receive deductions from your contributions is April 15th, 2021.
Second, it is the deadline for you to make your FINAL withdrawals from your 401(k) without incurring a penalty. This is all thanks to the CARES Act that was passed in March, which states that any withdrawals you make before December 31st can be repaid in the form of a distribution without incurring any additional income taxes.
Again: For BOTH withdrawals and contributions around your 401(k), they MUST be done by December 31st, 2020 and no later!
I don’t know what your intentions are with your 401(k) this year, but whatever they are, make sure everything is taken care of well before the end of the year. The last thing you want is an unnecessary financial penalty in a time where many people are struggling to stay afloat.
When You Bet Your Life Savings on Bitcoin… and It Actually Works!?
Didi Taihuttu made a huge gamble in 2017: With a family of five, he bet EVERYTHING he had on Bitcoin. His material belongings, his 2,500-square-foot home, a successful business… literally everything on only a single cryptocurrency worth $900 per coin and the potential for it to rise. All in all, a mid-six-figure investment.
And when the price tanked in 2018, he doubled down and bought even more. Somehow, some way, he knew the coin was going to sharply rise in value over the next few years. To this day, he expects Bitcoin to hit a minimum of $200,000 by the year 2022.
So far… his extremely bold decision has worked out surprisingly well for him and his family. They’ve travelled over 40 countries in the past four years, gotten rid of all their personal belongings, and they don’t even own a house or a bank account!
Obviously, you can imagine that no sane person would ever advise doing this. Taihuttu was very fortunate that Bitcoin has evolved into the hedging asset it is today. Its first boom in 2017 was driven by retail investors, and 2020 sees major players on the institutional side taking a very strong interest.
As always, we’re just sharing these stories to show you what other people is doing and what is possible in the wacky world of finance.
THIS Couple, on the Other Hand, Bet It All on Apple Shares!
Now for the flipside of the previous story, featuring a couple who struck gold when they made a very early bet on Apple. 20 years ago, Canadian couple Cindy and Bill bought $41,300 worth of Apple shares (which would have given then 21,400 Apple shares). Today, their net worth is a total of $4.4 million and the one position in Apple is worth $3.36 million.
What’s even more extraordinary is how ordinary they are: Cindy is a stay-at-home mom for their 11-year-old daughter while Bill nets $4,200 pre-tax as a truck driver. Not to mention they live in Vancouver, arguably the most expensive city in Canada behind Toronto.
They also have total expenses of $5,714 per month when you consider their mortgage, essential things such as groceries and utilities, along with $542 per month added to their savings account. But none of that phases the family, as they can withdraw a HUGE sum of money from selling their shares and the capital gains are entirely exempt from taxes.
Unfortunately, we can’t all be the early investors into trillion-dollar companies. But that doesn’t mean we can’t do everything in our power to take advantage of early trends as soon as we find them.
A Hidden $1 Billion Social Media Empire, Rooted in Pornography
You may have heard of the website known as OnlyFans, which works under a very simple premise: People pay a monthly subscription to see lewd photos and videos of a particular individual, and you can subscribe to as many people as you want. If a “content creator” is smart, they can offer tiered subscription plans for more “content.”
Sounds like a degenerate business model until you run the numbers…
- Over $200 million is paid out to creators per MONTH, with a total of 1 million creators on the platform
- $2 billion in sales will be made in 2020, with the company keeping 20% ($400 million in annual NET sales)
- 500,000 new users are being added to OnlyFans per day, with the total currently at 85 million
Not bad for a company that was launched just four years ago, and where the average subscription price is $12/month. Bloomberg reports on why this platform is so successful in distinguishing itself from other porn sites:
“What OnlyFans customers crave, said [the CEO], is a level of interaction and intimacy with the creator that they don’t typically get on Instagram or Twitter, where celebrities tend to share the most manicured version of themselves.
But to keep gaining more mainstream appeal, the company will likely have to shake off its reputation as a den of online debauchery and assuage safety concerns about the site.”
I’m curious to know: What do YOU think about the meteoric rise of OnlyFans? Is it a sustainable business, or will an emerging competitor quickly take their place? Reply to this newsletter and let us know what you predict will happen!