What does this mean? Simply, it means fewer stocks are attracting new investors. It’s a market where money seeks the “safer and proven bets.” It takes us back to a narrower market and enhances momentum plays. This usually presages corrections but not always. At the very least it foretells a period of increased volatility.

What is happening in the stock market may reflect the push and pull in the real economy. Some sectors are doing very well while others are losing momentum. They are slowing because we are not yet out of the pandemic and the stimulus money injected in the Spring is now running out. The cyclical recovery we were all hoping for is flagging.

Everyone knows that vaccines are on the way and will make a huge difference, but broad immunization will take many months. In the meantime, more and more businesses are getting in trouble. How many will not be able to survive until normalization returns? Not knowing, investors are refocusing on the sure winners in this pandemic.

If another stimulus package is enacted, then many more troubled firms and their employees may be able to weather this storm. At that point investors should once again take interest in the beaten-down stocks of companies that will thrive once more normal activity returns. So much hangs upon more stimulus. The Bull and his partners have hedged by maintaining a balance between companies benefiting from the pandemic and those that will benefit by its passing. Our bias is still with those thriving now. We will alter this mix as necessary, stay steady my friends.

The Lonely Bull