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American retail sales soared 17.7% in May - the biggest monthly jump ever. That added some "oomph" to a stock market rally that had been, frankly, a little on the tepid side.
The jump was driven in large part by thousands of retail stores and restaurants reopening after months under lockdown; stimulus checks and tax refunds gave consumers a bit more firepower than they might have otherwise had under the circumstances.
But the thing is, the future - not just of retail but the entire economy - is very much uncertain right now. Even though, after going through the initial "coronavirus crash" in March, investors seemed to shrug off the pandemic and all its economic destructiveness in April and May.
Since then, we've seen states reopen their economies and people begin to reemerge into the world to resume their daily lives. As the weather improved apace, people began crowding stores, beaches, and parks. Judging by images in the news, all too often that was happening without masks or distancing.
And now, we're seeing some troubling signs that COVID-19 infections are surging in places like Texas, Arizona, California, and Florida - some of the biggest state economies. Ominously, Arizona's largest hospital system recently warned that it is on track to run out of intensive care unit (ICU) beds soon.
Whether you want to call it a "second wave" or whether it's just a new phase of the first wave, COVID-19 cases are rising in some places that were initially spared this winter.
That's provoked a psychological one-eighty among investors. They're suddenly very concerned with the pandemic's progress, so much so that they sent the big indexes tumbling by high single digits last week in the biggest losses since March.
That disconnect - the contrast between a piecemeal public approach toward masks, social distancing, and other virus containment measures and the markets' sudden concern over new infections after months of ignoring them - is in fact a "Reality Gap" that we can leverage for big profits this week.
About the Author
D.R. Barton, Jr., Technical Trading Specialist for Money Map Press, is a world-renowned authority on technical trading with 25 years of experience. He spent the first part of his career as a chemical engineer with DuPont. During this time, he researched and developed the trading secrets that led to his first successful research service. Thanks to the wealth he was able to create for himself and his followers, D.R. retired early to pursue his passion for investing and showing fellow investors how to build toward financial freedom.