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There is No Market Anymore

There is No Market Anymore

June 24, 2020
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Since we are involved in markets, it is inevitable that from time to time someone will ask me what the market did that day. That used to be a simple question to answer. It didn’t matter whether they were talking about the Dow Jones Industrial Average (“DJIA”) and I was thinking about the S&P, markets were generally correlated, going up or down together. One of the reasons we have market indices like the S&P 500, Nasdaq, DJIA, etc. is to answer the question, “What did the market do today?” It’s much easier to look at an index of stocks that is somewhat intelligently put together to represent the overall market than it is to look at how every stock is doing.

However, Covid-19 has changed things, maybe temporarily, maybe permanently. The idea that there is no market anymore struck as I watched a parade of analysts come on cable shows each day and remain confused about how the “market” could continue to move higher. I understand their confusion. If you look at it from the previous way markets worked, then it makes no sense for the markets to be rallying in the face of the damage that the coronavirus has caused. However, if you look at it from the viewpoint that there is no real representative market anymore, then the move makes a lot more sense. 

Instead of thinking in terms of “markets,” think in terms of the “Haves and Have Nots.” The Haves represent the companies that benefit from lockdowns and social distancing (e.g., shipping, streaming, and video-conferencing services). With the world having changed, it makes sense that these companies are trading at all-time highs. On the other end of the spectrum, the Have Nots are companies that are hurt by lockdowns and social distancing (e.g., anything in Travel & Leisure, banks, etc.). It would make no sense for these stocks to be trading higher than they were before the lockdown, but it certainly makes sense for them to be higher than the March lows as the country starts to reopen. I have no idea if the Haves and the Have Nots will continue to rally, but I do know that until Covid-19 is under control, we can’t think about markets the way we have traditionally.  


The views and opinions expressed in this article are those of the CEO of Tuttle Tactical Management LLC (TTM) and are current to the date of publication. The information contained in this article may be subject to change without prior notice. TTM may invest client assets in the securities or products referenced; however, references to the issuers of sponsors of such offerings are intended for illustrative purpose and, in no manner, should be construed as recommendation to make or to not make an investment. Investors should contact a financial professional for guidance prior to making any investment.

© 2020 Tuttle Tactical Management LLC, a SEC-registered investment adviser. All rights reserved.

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