Pro Perspectives 7/20/21

July 20, 2021

We had a big bounce back in markets today.

By midday, stocks had fully recovered the slide of yesterday.

And, importantly, the big trendline from the lockdown-induced low of last year, has held in the benchmark S&P 500.

Let's take a look at the updated chart from my note yesterday …

Interestingly, following the declines of yesterday, driven by news of rising covid cases and increasing global restrictions, the big movers of today's bounce back (within the S&P 500) were some of the most vulnerable to a lockdown environment: cruise lines, airlines, retail and restaurants.

My takeaway: That shows confidence from the investment community that the environment for stocks and the economy will continue to run full-tilt (no hiccups).

Another interesting chart, with a significant trend that remained intact through the broad declines of yesterday: Oil.

The news from OPEC+ on Sunday that a standoff between the Saudis and UAE has ended, adds to the bullish outlook for oil (still a supply/demand mismatch). With that, this knee-jerk decline yesterday on concerns about global lockdowns, presents a buying opportunity for oil and oil and gas stocks.