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As someone who follows the markets closely on a daily basis, my estimated fair-market value for the S&P is around 2400. It bounced off an oversold condition at 2198 and has rallied well beyond 2400, hitting 2950 last week before starting to pull back.
Stocks are up for three reasons: first, the market is always forward-looking and the current situation is already priced in. What is not priced in is a second wave of infections that forces another months-long shutdown of the economy in the fall or winter.
Second, the only thing Democrats and Republicans can agree on is that they will spend any amount of money to keep propping up the economy. Whether it's more stimulus checks or endless replenishing of the PPP program, neither party is going to restrain their spending in an election year.
Third, and most important, the Federal Reserve is acting as an unlimited backstop of the economy, going so far as to buy junk bonds. The old adage of "don't fight the fed" applies here. If they can buy junk bonds, what's to stop them from buying index futures, ETFs, or even individual stocks?
I'm lucky enough to still be working from home and getting paid, so I will replace my 128i with a new 2 series later this year as I'd originally planned before all of this started. But I'm starting to think I won't trade in the 128i, I'll just park it at my parents house until the market recovers and I can get a fair price for it.
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