GameStop: What Does It Mean?

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The stock market had its worst week in months, as GameStop mania took over. Concern over what the massive moves in some of the most shorted stocks could mean are heightened, while overall economic data remains strong. This week the LPL Strategists try to put it all together

GameStop, What Does It Mean?

GameStop gained more than 1,600% in January, as shorts were forced to cover, producing one of the largest short covering rallies ever. Is this the first domino to fall? The LPL Strategists don’t think this is the start of an overall unhealthy market, but institutions covering shorts at sizable losses may be removing capital from some big cap names.

Earnings Season Is Off To A Great Start

Fourth quarter earnings season is doing tremendous, as according to FactSet, 37% of the S&P 500 Index has reported earnings, with 83% beating estimates. In fact, earnings are expected to be down 2.6% now, from down 11% at the start of the year. As the LPL Strategists noted, earnings drive long-term stock gains and this is a great sign for 2021.

The Super Bowl Indicator

Please note, you should never invest based on who wins the Super Bowl, but this is a fun one to discuss. Historically, stocks do better when an NFC team wins the Big Game (10.2% on average) versus an AFC team (7.1% on average). As the LPL Strategists pointed out though, stocks have gained 10 of the past 11 times the AFC won, so this is far from perfect. Lastly, the S&P 500 gained 26.4% the last time the Tampa Bay Buccaneers won, so is rooting for Tom Brady justified?

Tune in now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunes, Google Podcasts, or Spotify and find us on the LPL Research YouTube channel.

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IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 

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For Public Use — Tracking #: 1-05105494 (02/22)