The Close: Welcome to 2021 Traders!
Welcome to 2021! Does this year feel any different yet? Probably not, yet most of the markets felt the effects of the new year today, as the market closed down big to begin the year. Today was actually the largest drop in the market on the first day of trading since 2008. The three major indexes were down more than double, and triple, digits, but there is some hope within the market today. I will outline everything within this article.
Photo: Dental Tribune
To start, let's discuss what the major indexes did today. The Dow Jones was down more than 380 points today, down a total of 382.59, or -1.25%. The S&P 500 was down 55.42 points today, -1.48%. The Nasdaq was down 189.84, or -1.47%. With markets being down a total of -4.2% today, how can we look up? What can we look forward to this year? Well, I will outline a few stocks which performed well today, and could potentially have an outbreak in 2021. First, I want to discuss the dollar vs bitcoin. Bitcoin has seen quite the surge as of late, posting a 731.50 point gain today, or 2.29%. Bitcoin is currently trading at 32,738.6, which is higher than the DJIA as of right now. Is this a bubble or is it legit? I believe that we are currently experiencing a bubble within crypto, as it seems everyone and their mother want to get their hands on this thing. That being said, I am not naive enough to believe the dollar will survive the next 20 years. Although I think bitcoin, and all of crypto, is experiencing a bubble right now, I also believe crypto will take control of this country within the next 10-20 years. Think about it this way, when we received the first stimulus bill, a good portion of that money was put into the stock market by most Americans, those who could afford it after taxes were taken into account. That just shows us, most Americans do not trust their money in the form of cash. The stigma “Cash is king” has gone out the window. If you have your money hidden in your wall, you will likely lose significant value in it within the next few years. Cryptocurrency is a hedge against the dollar, but so is the stock market if you think about it. I’m unsure how bitcoin will be replacing the dollar, when referring to the government’s control of it, but regardless the fiat currency will continue to sore until we see a pullback from the bubble. While markets always increase over time, it is extremely difficult, almost unheard of, to sustain this level of success within a currency.
I want to point out a significant buying opportunity I have noticed within the markets today. In my blog regarding the 2021 outline for the best picks, I will have a bit of a continuation from that. In down days like we experienced today, these two sectors are worth looking at heavily: Airlines and cruise lines, or just travel in general. Carnival, $CCL, was down -5.91%, Norweigian Cruise Line, $NCLH, was down -6.69% today, and United Airlines, $UAL, was down -3.75% to end the day. These decreases provide most investors with better buying opportunities, as the consensus around the travel industry is that it will see perhaps the largest increase of any sector this year.
Premarket futures trading has opened, and we are seeing better news for tomorrow ahead of the open. The Dow is up +48, the S&P is up +9.50, and the Nasdaq futures is up +25 points. This indicates the futures markets are up, slightly, yet not enough to even make a dent in the loss we experienced today. We will see what occurs within the Georgia runoff elections tonight, and that could indicate what the market will do tomorrow.