The Omicron-Driven Volatility Won’t End Yet, But the Bullish Outlook is Still Alive

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Omicron - The Omicron-Driven Volatility Won’t End Yet, But the Bullish Outlook is Still Alive

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If you’ve got any investing Dramamine, you might want to take some because it is going to be a volatile ride on Wall Street through the end of the year as we continue to learn more about the Omicron variant of COVID-19.

Recently, we analyzed the post-Thanksgiving collapse and rebound in the S&P 500 that was driven by Omicron concerns.

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And just when we thought we might be out of the woods after the Federal Reserve soothed investors’ inflationary fears, we went through another Omicron-induced V-reversal on the S&P 500.

You see, investors want the Fed to take steps to deal with inflation, but they also want the U.S. and global economies to continue growing while the Fed tapers its bond-purchase program and raising interest rates next year.

These aren’t unreasonable expectations; even the Federal Open Market Committee (FOMC) believes the U.S. economy is going to grow by 4% during 2022 while the Fed takes action to bring the core inflation rate down to 2.7%.

However, when investors start seeing countries in Europe and elsewhere shutting down for a few weeks to prevent more significant COVID-case spread during the holidays, Wall Street gets nervous. When the S&P 500 is near its all-time highs, that nervousness can turn into profit-taking in an instant.

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That’s one of the reasons we’re getting this volatile back-and-forth; one day, we get reports about a country shutting down all non-essential businesses, and stocks go down. Next, we get a report that the hospitalization rate with the Omicron variant is significantly lower than it is with the Delta variant, and stocks go up.

To summarize: Get ready for more news-driven swings, and most importantly, we don’t anticipate this volatility will undermine the general stability of the bullish outlook on Wall Street.

We’re going to keep today’s Trading Opportunities letter short, so you can get an early start to the holiday festivities this weekend.

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And because this has been an eventful year, we’re going to take a look back at some of the defining events of 2021 — and we expect those events to shape 2022. All that goes down on Monday.

Until then, Happy Holidays!

Sincerely,

John Jagerson & Wade Hansen
Editors, Trading Opportunities

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Article printed from InvestorPlace Media, https://investorplace.com/tradingopportunities/2021/12/the-omicron-driven-volatility-wont-end-yet-but-the-bullish-outlook-is-still-alive/.

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