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Nothing has fundamentally changed in the economy to warrant a sustained rally in the stock markets, said Gareth Soloway, chief market strategist at InTheMoneyStocks.com, speaking with Kitco News at 3:45 pm EST on Monday.
“I don’t believe anything major has changed. We knew a vaccine was going to come, the projections are still first quarter, early second quarter,” he said. “The same thing with Biden coming into the White House, it doesn’t change a lot of the economics of the market, so it does concern me and I used it to put on shorts today.”
The Dow Jones rallied 800 points in the biggest single day gain in 5 months on Monday following Pfizer's announcement that their COVID-19 vaccine is 90% effective.
Soloway added that while retail traders reacted positively to the news on market open and have been the primary group driving prices higher, institutional investors have been using the opportunity to unload positions and take profits.
“Any time we have a gap up, it’s the institutions gapping that market up. So what’s going on is the small investor got very excited since the open, the Robinghood traders, etc., but the institutions have been selling into it,” he said.
Soloway took profits this morning on big moves in stocks like JP Morgan.
“Any time you get an extended move like this where you’re so short-term overbought, and I’m just talking about the last week and it has been a massive move, you have to think like a shorter trader, because in my mind I’m always thinking to myself, give me a pullback and I’ll re-buy, but I always like to pocket those profits,” he said.
On gold, Soloway said that long-term, the metal can hit $3,000 an ounce in two years’ time.
By David Lin
For Kitco News
