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CDC announced new guidelines last Thursday. Fully vaccinated people don’t have to wear masks outside or inside and can basically go back to their life before the pandemic. This woke the so-called back-to-normal stocks up. Retailers ETF was up 4% on Friday. Airlines, cruise lines, hotels, car rentals, entertainment stocks were on fire. So were oil stocks, which are at the intersection of back to normal and rising inflation expectations. How long is this theme going to last? It could be a few days or a few weeks. A lot has already been priced in but even the most optimistic among us didn’t believe that we can go back to normal so soon. This is why I think this theme has room to run and anything related to travel and leisure is likely to outperform in the near-term.
In the meantime, SPY tested its 50-day moving average and as it usually happens, the first test led to a quick bounce. QQQ and IWM are still lagging. Both are still below their 20 and 50dma. There’s a good chance of more choppiness ahead. All we can do is focus on setups and find themes that are currently in favor.
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