The prime pumping by the US government has proven to be quite effective with a V-shaped recovery in the stock market. It would be difficult to imagine if the US government can do this again should there be another black swan event within 1 year.
The retail investors are the major participants for the US stock market during this pandemic. This article indicated how the retail investors took over the US stock market https://www.zerohedge.com/markets/how-retail-investors-took-over-stock-market.
In the above article, the chart indicated that the clients positions in stocks with Robinhood (A US brokerage firm) has more than doubled since the US lockdown. For you information, it is currently commission-free to trade in many of the US trading platforms. With zero cost to the retail investors, they are making a big wave into the stock market.
In Malaysia, although we do not have zero cost in trading, but many Malaysians do realise that the pandemic led recession is an opportunity to make money in the stock market. We can see that in our market participation statistics that the local retail investors had became the net buyers of the local stocks during this period as well. https://www.bursamalaysia.com/market_information/market_statistic/securities
What happened to the economy? Are we not seeing all the negatives in the economic data? Yes, but our stock market is driven by sentiments and emotion. When investors see the massive stimulus package initiated by the governments around the world, the sentiments helped to put more liquidity into the stock market as the interest rate is historical low. Here is a macro view of the stimulus packages around the world: https://howmuch.net/articles/worlds-economic-programs-against-coronavirus
As you can see that the extent of the stimulus is unprecedented. The governments are applying expansionary monetary and fiscal policies to help stimulate the economy regardless of how much debt burden will be added for this round.
Below are the trading range for the 3 markets namely the S&P 500, KLCI and the STI:
S&P 500: The S&P 500 gained 25pts or 0.8% for the week at 3044. It also gained 191 pts or 6.6% for the month of May. The index has now crossed its 200 day MA which is another milestone, besides its 50% retracement milestone. Technically, the US market is bullish and looks like the trend will continue further.The trading range is between 2975 to 3075.
KLCI: The KLCI gained 36pts or 2.5% for the week at 1473. On a monthly basis, it gained 65pts or 4.7%. The index is above the 20day MA but below the 200day MA. The index has been bullish led by the rubber glove industry and the local retail participants. What happened to the economy? Well, at this moment retail investors are overly excited about the stock market and they will temporary ignore the fundamental for now until we encounter another bad news. Next week, we are looking at the support at 1430, resistance 1500.
STI: The STI gained 10pts or 0.4% for the week at 2510. For the month of May, it lost 113 points or -4.3% for the week. The index has underperformed the regional markets together with the Hang Seng Index. Currently the index still remained at below both the 20 day MA and the 200 day MA. Next week trading range remained at between 2475 to 2575.