Markets rebounded today (11/29) as more information was received on the new COVID-19 variant. Interestingly, all but one of our market indicators are positive suggesting clear sailing as we enter the final month of the year. However (sticking with the maritime theme), I suspect there will be a light chop, occasional white caps, and there's always the possibility of another rogue wave.
COVID-19 Update:
Looks like we can breathe a little easier:
Omicron Is "Extremely Mild" Says Doctor Who First Discovered Strain As Numerous Mutations "Destabilize" The Virus, ZeroHedge, 11/28/21
Stocks Open Higher as Investors Weigh Omicron Variant, Wall St. Journal, 11/29/21
No Severe Omicron COVID-19 Cases Among Vaccinated People: Top Israeli Expert, ZeroHedge 11/29/21
A Little Perspective:
The U.S. stock market suffered one of its worse days of the year Friday (11/26/21) as investors ran for the hills on news that a new variant of COVID-19 (dubbed "Omicron") had been identified. The Volatility Index (VIX a.k.a. the Fear Guage) rose dramatically. Friday's 54% gain ranks fourth in VIX's 30+ year history. So what does this all mean for the market going forward? While no one can predict the future (even me), we can let history give us some guidance. (Hat tip to Charlie Bilello at Compound Advisors.)
This first table shows the top 20 one-day percent changes for the VIX and the subsequent change in the S&P 500 for a variety of periods. Most of the time the S&P 500 has risen, in some cases significantly.
And, while Friday's 2+% decline was unpleasant, it's not that unusual as you can see from this table, also from Charlie Bilello.
So we should take solace in the fact that what we experienced on Friday (a half-day by the way) is not that unusual and doesn't necessarily mean we're in for a bad stretch.
Homework:
Howard Marks is out with his latest memo, The Winds of Change. Like all his writings, it is worth reading. You can find a link to all his memos on our Resources page.
And Finally...
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