The markets don't much care about what's going on in DC today. If you had told me folks would have stormed the Capitol Building or the White House, I would have bet money we'd be down hard. Instead, the S&P 500 is still up on the day heading into the last hour of trading. Easy money policy of the Fed is trumping (no pun intended) the insanity in Washington this afternoon.
What next is anyone's guess but my view is this will be a short-term event. It may last more than the afternoon, the action in DC, but I don't foresee it being anything long-term and I don't see it impacting the economy. Sellers right now are simply adopting a conservative wait-and-see for a few hours or a few days positions. There's absolutely nothing wrong with that. I don't believe the market will run away from you in a week if you want to take some profits and see how this plays out for a few days.
On the flip side, if anything you've been eyeing craters, this probably isn't a terrible time to nibble. As I've said, I don't think this is a long-term impact on equities. Today is a play on emotions. And how do you react to this? What's happening in DC is so beyond the scope of anything most of us have ever known or seen that it creates confusion. The first thing a confused investor does is become more conservative. That means less buying and more selling. That's why we saw the initial dip.
Will this change the potential for cannabis over the remainder of 2021?
Nope.
Will this change the level of gambling we see?
Highly doubtful.
Streaming, online gaming, the progression of electric vehicles?
Nope. Nope. And nope.
It's a good time to revisit your thesis on the sectors you like in 2021. Check out your list of names you felt had potential. If today isn't the buying opportunity, then it will come soon for those willing to buy and hold.
For traders, it's just another day. Nothing that has happened should change your process. The overall trend hasn't changed. This is a social-political issue, not an economy issue. Yes, it could evolve, but that too would take time.
In short, this is noise. Stay focused, maybe lighten positions so you can loosen stops a little and see how the next day or two play out before reacting emotionally out of haste.
Stay safe out there.
