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19.01.202112:58 Forex Analysis & Reviews: When should the growth in stock markets be expected?

Long-term review

Today, small speculators play a fairly significant role in the stock market. Experts say that this means that they will most likely invest money soon from the new package of state support in shares.

To prove their theory, analysts recall similar events in early January of this year. Americans received checks for $ 600, and after that, volume of trading in so-called "penny stocks" and options sharply increased. At the same time, Tesla's capitalization rose by $130 billion, and the value of company shares that went on an IPO doubled.

Exchange Rates 19.01.2021 analysis

This can hardly be called a coincidence, but rather a convincing proof that an important role in the market is played by small speculators today, who may receive new checks for $1400 soon.

It can be recalled that President-elect Joe Biden announced a $ 1.9 trillion stimulus plan last Thursday. According to him, more than 150 million Americans can receive checks for $ 1400, in addition to $ 600 that was already issued in December. Thus, there is a high probability that these checks will end up on the stock market in the midst of a speculative boom.

Experts predict that a new wave of speculative optimism will be observed in the market if the additional $ 1,400 falls into the hands of the same people as before, and this will continue to inflate an already impressive bubble. But if the financial aid is directed to people with lower-than-average incomes, such speculation will be less likely.

However, the available data suggest that most recipients of budget assistance are likely to invest in the stock market. In fact, a 30% increase in trading activity was recorded among all recipients of checks in the first half of January, regardless of their income level. This is higher compared to the beginning of December 2020. At the same time, the volume of trading activity among check recipients with an annual income of less than $75,000 increased by 53%.

Today, the daily trading volume in penny stocks is confidently showing an indicator of $ 40 billion, which is six times more than a year ago. In this case, analysts recorded the second record volume of trading in call options last week.

In addition, the basket of favorite retail investors has risen by 10% since December ended, and defeated both the S&P 500 and the basket of favorites of hedge fund stocks.

Irina Maksimova,
Analitickog eksperta
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