Pandemic Caution Ahead?

Hey 5-Star Trader,

It’s undeniable that news and media outlets have a huge influence on the overall health of the market. While we are trading within the U.S. Stock Market, worldwide news also greatly affects which way Wall Street decides to sway. Recently, there has been a slew of news hitting the internet so I wanted to take some time and relay what I’ve been paying close attention to and how it might impact the market.

Just when we thought Covid-19 was in our rearview mirror, the new Delta variant, is threatening us into another possible lockdown. Consumer discretionary seems like it could be the first casualty, as it took an initial hit during the initial Delta variant coverage. It’s a little early to say if this sector will collapse entirely. If this situation continues to worsen, the travel industry will likely take another nose dive as well. My suggestion is to start digging up your Covid-19 “darling” tickers that thrived in the midst of the pandemic, as they could soon see a resurgence.

I’ve also been paying close attention to the pattern of the market over the past few days. We’ve seen some opens where the market starts with a gap toward the downside, but then proceeds to bounce back. However, I’m not confident that pattern will continue for much longer. Initial public offering (IPO) stocks are getting hit, which is usually a sign to me that the market is weakening.

There are many variables in our situation right now and it is tough to tell which way things will sway. Will we see the continuation of Delta cases? Are we headed into another lockdown? Will there be sector rotation in favor of the Covid-19 darlings? While I can’t be certain, I urge you to be cautious.

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