Monday, November 9th, 2020 was the day a COVID vaccination was announced by means of a press release. Markets went in overdrive. But that’s not reason why we believe this day should be mentioned in history books. The reason why this day is historic is because the market reacted on it one day earlier. Did we say that the market knew about this, before the news came out? Yes, that’s what we say. And there is one chart that makes this point clear. Because of this our 2021 forecasts are for risk assets like stocks, emerging markets, a select few top cryptocurrencies, some commodities.
Stated differently, the end of the Corona crash period in markets was confirmed on Monday, November 9th, and the market confirmed it one trading day earlier.
The chart on which this became obvious is the daily Treasuries chart (TLT ETF).
Readers have to do a small effort in counting the number of candlesticks. Counting back 6 candlesticks you will find this small red candlestick which is hanging in there. That’s Friday, November 6th, 2020.
The day before, the last red candlestick to touch the red falling channel, is Thursday November 5th, 2020. That was the last day in which Treasuries were testing the multi-decade uptrend resistance point (green background). It was also the test of resistance of this shorter term red channel, the decline that is dominant in the short to medium term.
Needless to say, falling Treasuries favor risk assets like stocks, particularly financial stocks. As per our market forecast published earlier today The Next Big Trend In Stocks Is Financial Stocks
What this chart learns is that the market started reacting to the COVID-vaccination news one or two days before it was released.
Coincidence? Surprise?
No, the market is much smarter than we think. And as per our 100 investing tips: the news is IN the chart, not the other way around.
In other words the chart picked up the news before it was released. And that’s the ultimate reason why investors must stick to charting principles as their north star, as their ultimate compass to navigate through this rich world full of opportunities and risks, called financial markets.
The chart has all the news that you need, without knowing the real news. It hosts the information that shows the collective decision of participants on events, existing news, news to be released. Better stick to the chart, and ignore 99% of the news, per our 1/99 Investing Principles.
