More than half of US states are experiencing >50% rise in COVID cases and the US market has already shrugged it , at least from how the markets have so far responded to it. Market participants are looking at how the markets react to the news rather than the news itself.
In a way, market participants assume things based on how the market react and start to become complacent in making the assumption that it no longer matters because they saw a positive reaction or response. But markets have a way to deceive you in unexpected ways, because if you think the market is efficient, I think not. The markets have been slow to react to the COVID when it began, and because of the Kudlows and Trumps jawboning the market to believe that the situation is not as dire, there may actually be a lag in the ultimate response.
Remember Assumptions are Fluid Not Static. Just because the markets have not reacted negatively to the dire COVID situation, the second wave if you like, does not mean it won't. Market participants may have expected the downdraft when it happened, it didnt arrive, sending the message that it does not care, then started going long, then the markets do care subsequently. It is this lag that makes it incredibly difficult to anticipate day to day market direction. Which makes short term trading incredibly difficult and possibly counter productive.
