Stocks Dodge Bear Bullet, Defensive Sectors Surge

Get to know the Bitcoin trading detail. See how the stocks related to Bitcoin trading.

What Are The Market Moves

It was no surprise that with the recent jitters in the US stock markets, a day began with a gap down and what appeared to be a determined effort to drop lower, thereby about 30 minutes into the session, the S&P 500, led by strong performance in the consumer staples sector had retraced its steps to get back to breakeven compared to the day before. This is why the sector tracked by the sector-index ETF, which is the Consumer Staples Select Sector SPDR Fund (XLP) had, later on, closed the day a respectable1.17% higher while the rest of the market held ground.

By now, notably, the consumer discretionary sector thereby as well as utility stocks have performed well in today’s whipsaw trading. Therefore these sectors leading the way, where investors are hoping that the market finds its footing is likely to be disappointed whereas during a day as the dollar remained tightly range-bound, the stocks provided a tell for investor sentiment as they told it was the story of nervous investors. 

Along with defensive stocks in the consumer, staples brands such as The Coca Cola Company as well as McDonald's Corporation doesn’t typically lead the markets unless investors are keenly looking for haven kinds of investments, and these stocks are being considered slower movers but more reliable than the tech sector darlings. Here the investors when they favor these stocks over all others, signal nervousness and often more falling prices to come.  

It was observed that after The Walt Disney Company’s mixed earnings report, it had seemed to end its conference call with the share price substantially in after-hours trading as by the time the session closed as the share price was off over 5%. Thereby the markets appear to be entering an environment where companies are punished for bad news or even lackluster results.

Whereas in such an environment investors favor consumer staples stocks looking back over the year which is not a recent trend. Thereby considering the relative performance of McDonald's and Coca-Cola shares it may appear many investors have been seeking safer ground for a while. 

How Are Gold And Oil Taking Diverging Paths

As the markets are currently showing clear signs of nervousness and increased volatility these investors tend to look for alternative investments to hedge their returns. Thereafter commodities are typically inflation-sensitive so a currency war between countries might be expected to affect commodity prices across the board as not how things are currently playing out.

While it is the price of gold that is tracked by the SPDR Gold Shares it attempts to follow has been on the rise all summer and before. Thereby in comparison, the price of oil has tumbled significantly over the same period. While it is these diverging moves that imply there may be more afoot in the markets than the simple explanation provided by the US-China trade war headlines.  

Can Bitcoin Be An Effective Hedge Also?

It was found that three years ago a useful research paper was published in the journal International Review of Financial Analysis as authors concluded that Bitcoin was not an effective hedging instrument certainly not in comparison to gold. Thereby a lot has changed in the cryptocurrency world in these three years.

To consider that it compares the performance of gold, Bitcoin, and the S&P500, it comes pretty clear that Bitcoin is much more volatile than the other two asset classes. This is however clear that the timing of the market’s nervousness is marked by a clear uptrend in bitcoin’s price and that the recent drop off in stock prices was inversely correlated with bitcoin’s recent jump. It is quite clear that gold is certainly the investor's hedge of choice right now and may not be long before investors will want to consider the merits of hedging with Bitcoin which is a must. 

The Bottom Line

It has been found that critically whereas the market average managed to hang on to the meager rebounds, from the day before it has also been noted that the nervousness is visible whereby the price moves of the consumer staples stocks, as well as their price of hedging investments like gold, has been for the more adventurous investor with Bitcoin as well. Thus it is the fact according to the popularity of Bitcoin that there may be more volatility coming if this nervousness continues. Thus it is found that Bitcoin trading has a long way to go before it culminates to a probable death.

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