News of 5-minute test kits, hopeful vaccine possibilities, and new clinical trials helped to lift the spirits of the market, keeping the bullish rally alive another day.  However, traders should guard against getting caught up in Fear of Missing Out, chasing a rally already up nearly 20%.  With infections, numbers continuing to rise rapidly, and more states going into lockdown, we still have a long road to recovery.  Consider your risk very carefully as we head in a big week of data that includes jobs’ data.

Asian markets were mixed but mostly modestly higher as China reported better than expected manufacturing data.  European markets are following suit with mixed but mostly modest increases this morning.  US Futures after a volatile evening currently point to flat open ahead of earnings and economic reports. 

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have just 33 companies reporting.  Notable releases include MKC, BB, CAG, & FLR. 

Top Stories

The US Navy ship Comfort arrived in New York Harbor to help their overwhelmed hospitals.  Yesterday the Major said they would need triple the hospital capacity by May as the outbreak continues to ravage the city.  As the infection numbers continue to rise, more and more states are ordering lockdowns, and the CDC is considering a rule that everyone wears a mask when out in public.

There were some bright spots on the virus front yesterday with testing kits that can provide results in just 5 minutes and news of vaccine tests and clinical trials beginning for hopeful treatments lifting the spirits of investors yesterday. 

China says manufacturing activity expanded in March.  That seems very hard to believe, but the Asian markets were able to make modest gains on the back of the data.

While the market rallies, investors are bracing for employment numbers later this week that could reach historic levels as some of the nation’s cities continue to shutdown.  Some estimates indicate an unemployment rate as high as 32%, with more than 45% of companies considering layoffs.

Technically Speaking

Investors found hope in the news vaccine tests, clinical trials, and test kits that can deliver results in just 5-minutes!  While encouraging the US infections, top 160,000 with more than 3,100 deaths as the Mayor of New York calls for a tripling of hospital capacity by May to deal with the sick.  The DIA recovered the 2018 lows, the QQQ held onto its 500-day average as support the SPY recovered and held critical support at 255.  With DIA, SPY, and QQQ nearly 20% off recent lows and facing a huge week of economic data, one has to wonder if the rally is getting a bit ahead of itself.  With the likelihood of shocking and historic unemployment numbers just around the corner, another round of selling is not out of the question.  As infection numbers continue to rise, more and more state is shutting down effecting some of our nations largest cities.

Guard yourself against the Fear of Missing Out and disregarding the risk, the massive price volatility and fast we are far from curbing the first wave of the outbreak.  With the 2^nd quarter earings beginning in a couple of weeks and the high probability of recession, a V-bottom recovery seems very unlikely.  Stay focused on price action and plan your risk carefully because the path forward remains very uncertain.

Trade Wisely,

Doug

As we wind down the worst March in stock market history, tough decisions lie ahead ahead for investors with the national lock-down extended to April 30^th with rapidly increasing infection counts.  Although April has proven to be a bullish month for the market since 2005, this year, we face a very volatile and uncertain path forward.  With the VIX holding above a 65 handle even as the market found the willingness to rally, traders should prepare for very challenging price action to continue.

Asian markets closed modestly lower on Monday while Australia broke ranks to surge 7% higher.  European markets are trading cautiously around the flat-line in a choppy session.  US Futures having recovered from sharp declines overnight currently point to flat to ever so slightly bullish open ahead of a big week of uncertain economic data.

Economic Calendar

Earnings Calendar

Although we have a big day a earnings reports, I can only find RH and CALM as notable because most are tiny companies.

Top Stories

This weekend the President extended the country lockdown until April 30^th as the spread of the virus continues to spread rapidly.  As of this morning, infections top 142,000, with 2,489 deaths.

According to Traders Alminic, the market has not experienced a bearish April since 2005, but Goldman is predicting that the market will turn lower as oil continues to fall due to lack of demand with the growing expectation of a worldwide recession. 

The FOMC has said that nothing is out of the question as far as their possible operation.  Some are now beginning to speculate that the Fed might consider direct stock purchases to stabilize the market.  Such an extreme course of action would require Congressional approval adding to the already historically aggressive use of its fiscal powers.

Technically Speaking

Although the Dow closed Friday down more than 900 points, I have to admit it was much better than I would have expected heading into a weekend of sharply rising infections.  Though leaving behind a rather bearish candle pattern, there was a small silver-lining as QQQ managed to hold onto its 500-day moving average by the close.  Unforutunitally, that’s about all the technical positives in the daily index charts as we come to the end of the worst March in market history.  Historically April has proved to be a bullish month since 2005. Still, with an extended lockdown and health officials talking about more than 100,000 possible deaths, April 2020 is likely going to be very challenging.

As oil demand continues to decline, with OPEC and Russia continuing to lock horns, many are now suggesting that prices could fall below $20 per barrel.  Even as the market rallied last week, the VIX defiantly held up closing the week at a 65 handle, indicating the extreme fear still felt by investors trying to sort out what comes next.  While many say its time to begin buying up value stocks, Goldman is now suggesting they expect prices to turn lower.  One thing for sure is that traders and investors have tough decisions ahead amidst such volatility and uncertainty.

Trade Wisely,

Doug

After receiving the worst unemployment number in history, the market chose to focus on the coming 2-trillion stimulus bill extending the bullishness for a 3^rd day.  The rally recovered some important price levels of support, but not the question is, will they hold heading into an uncertain weekend.  With the US now with the highest number of confirmed infections and the 2^nd quarter earnings season just around the corner, there is still a lot of fear in the market.

Asian markets follow the lead of the US rallying to close out the week in the green.  European indexes, however, are red across the board this morning but only down about 2% at the time of this report.  US Futures point to an overnight gap down at the open ahead of personal income and consumer sentiment reports.  Consider your risk carefully as we head into the weekend because anything is possible by Monday morning.

Economic Calendar

Earnings Calendar

We have a light day on the economic calendar with just over 40 companies reporting.  However, the majority are small-cap companies, and I can find no particularly notable reports today.

Top Stories

Hopes are high that the House will move forward with a vote today on the 2-trillion stimulus bill.  There is, however, still a chance that one or more representatives reaching for the spotlight could delay the vote into the weekend.

The US now has the grim title as the highest number of infections that will, too, continue to rise exponentially through the weekend.  As of this morning, 85,625 American infections and more than 1300 have died.

The market shrugged off the record-breaking 3.2 million unemployment number to record the biggest bounce 3-day bounce off in history.  To put this into perspective, unemployment topped out around 780,000 during the 2008 banking crisis.

Technically Speaking

Although the third day of the rally was fantastic, it did little to improve the technicals of the index charts.  The QQQ had the best response once again, recovering its 500-day average.  The SPY broke through resistance at 255, and the Dow recovered it 2018 low.  The question now is, can they hold these important price supports heading into the uncertainty of the weekend.  Hope that passage of the stimulus bill will undoubtedly provide a little help, but the unrelenting bad news of the virus spread will continue to weigh heavily on the minds of investors.  Keep in mind it will be at least another 3-weeks before the relief checks start to reach American bank accounts.  In this market, a lot can happen over the course of just one hour; 3-weeks will feel like a lifetime!

Those that rushed to by at the end of the day yesterday will be punished this morning with a nasty overnight gap down.  As for me, I plan to go into the weekend, essentially flat.  I won’t rule out the possibility of some quick intra-day trades, but for me holding into the weekend is a straight-up gamble that I will avoid.  Be safe, my friends and have a wonderful weekend.

Trade Wisley,

Doug

Our first 2-day rally in weeks was a sweet relief, but today we face a possible history-making increase in joblessness.  Can the hope of the 2 Trillion dollar stimulus bill keep the bulls engaged in the wake of high virus-related unemployment?  We will soon find out at 8:30 AM Eastern this morning.  With the death toll and infections, rising holding positions into the uncertainty weekend will likely be difficult.

Asian markets closed lower across the board, with the NIKKEI falling 4.50%.  European indexes are seeing modest losses this morning, and the US Futures point to a Dow gap down of more than 150 points ahead of readings on GDP and Jobless Claims.  Expect considerable volatility as the market reacts to the first economic data to include the outbreak impacts on business.  It could be a wild day, so buckle up.

Economic Calendar

Earnings Calendar

We have nearly 110 companies fessing up to quarterly results on Thursday.  Notable reports include CSIQ, FDS, GME, JEF, KBH, LULU, MOV, SIG & RH.

Top Stories

Now the Senate has passed the stimulus bill it’s now time for the House to get the political spotlight.  According to reports, they plan to begin their work on Friday, and the political rhetoric is already raising concerns about how long they might delay getting the bill to the President.

The coronavirus death toll jumped over 1000 during the night with confirmed cases quickly approaching 70,000.  The New York health care system is already in a crisis and seems to be on the same escalation curve as Italy.

The entire market is sitting on the edge of its seat this morning, waiting for a reading on the jobless numbers at 8:30 AM eastern.  Consensus Estimates expects more than 700,000, but some are suggesting the number could be as high as 3.5 million.  Needless to say, the outbreak impacts on employment are significant, and it will be interesting to see if the warm and fuzzy glow of the stimulus bill will keep the bulls engaged.

Technically Speaking

Yesterday we witnessed the first day of bullish follow-through in several weeks.   At the close of trading, the DIW, SPT, and IWM managed to hold on to some gains as traders took profits ahead of the Jobless numbers.  Sadly the QQQ closed lower on the day and failed to hold it’s 500-day average.  The DIA managed to test the 2018 lows, but the resistance proved too strong backing way sharply after the test. 

Having taken some very nice gains yesterday, I now think the risks are just way too high ahead of the jobless numbers and heading into the week.  The outbreak numbers have begun to rise exponentially, and I suspect it will weigh heavily on the minds of investors.  If anything, the path forward appears even more uncertain with such a long road ahead in a battle with an enemy we can’t see. 

Trade Wisely,

Doug

Congress finally came to an agreement, and the stimulus is on the way!  The question is, will it bring stability to the market?  In a very wild overnight session, the Dow futures rallied 500 points after the news of the agreement.  Unfortunately, as I write this report, the futures have been unable to hold the news-driven gains.  With unemployment numbers due out tomorrow and New York seeing a doubling of confirmed cases every 3-days one has to wonder if there is any amount of money that can buy our way out of this terrible situation.

Asian markets closed positive across the board last night, with the Nikkei lifting over 8%.  Sadly, European markets are not feeling the love form all the stimulus spending with mixed results and the DAX down 2.25%.  Here in the US, the futures markets have seen a very turbulent evening.  They have been bullish and then swung quickly bearish, where it might be by the open is anyone’s guess!  About the only thing, I think we can count if very volatile price action in the day ahead.

Economic Calendar

Earnings Calendar

On the Wednesday earnings calendar, we have over 50 companies reporting results.  Looking through the list PAYX is only notable I can come with this morning. 

Top Stories

At about 1:30 AM the Congress cane to an agreement on the stimulus plan.  The question now, will the market be able to rally a second day on the news?  Only time will tell.

They are reaching a critical situation in New York City now with more than 25,000 cases, as the cases double every three days overwhelming the healthcare system.  The President said yesterday that he would like the country to get back to work by Easter, which is just three weeks away.  However, health officials and many of the state Governors disagree, saying the risk of spread is too high. 

As business around the country continues to shut down, the next focus may be the unemployment numbers that are due out on Thursday morning.  Consensus estimates suggest more than 700,000 will be out of work, and the numbers are likely to rise in the coming weeks.

Technically Speaking

I was so nice to see a little relief from the selling yesterday, but now the question is, can it follow-though?  In the middle of the night, Congress finally came to an agreement, and the President said he would sign the stimulus bill immediately after its passage.  Futures rally nearly 500 points on the news but have already faded into the red in a very volatile overnight session.  With 2.5 trillion buy us some stability?  One would hope so because the Trillions that FOMC has spent has done nothing to curb the historic market collapse. 

Tomorrow we will get a reading on unemployment, and according to estimates, it will be shocking.  Of course, direct payments will be helpful to those out of work, and the company bailouts with the support of the medical system is much needed.  However, with all this spending translate into stock buying as the virus spreads and the path forward remains uncertain? I’ve said it before, and I will repeat once more that it seems unlikely we can buy our way out of a pandemic that continues to spread across our country.

Trade Wisely,

Doug

With Congress still trying to get it to act together on a massive stimulus bill, the US Futures point to a welcome rally.   Though it might prove to be only a monetary relief with quickly rising infection numbers and a death toll sharply rising, any reprieve in the selling that created the fastest 30% decline in history is a welcome relief.  We still face a busy week of economic reports with impacts of the outbreak starting to trickle into the numbers.  Expect price volatility to continue with lots of news-driven whipsaws and reversals as the market tries to recover.

Asian markets closed in the green across the board with the Nikkei surging more than 7% even after the postponement of the Summer Games.  European markets are also in the mood to rally this morning with gains in the DAX over 6% in reaction to the Fed Stimulus.  Ahead of earnings from NKE, CCL, and economic reports that include PPI & New Home Sales, US Futures point to a huge gap up at the open.  If Congress can pass the stimulus, expect another surge of short-term optimism that could extend the relief rally.

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have 72 companies stepping up to report results.  Notable reports include NKE, CCL, CONN, INFO, & SCS.

Top Stories

In the last six weeks, the Dow has lost about 11,000 points, but this morning we have a moment of relief with the US Futures pointing to a rally of more than 900 points.  We are still waiting on Congress to decide on a stimulus package that will total more than 2-trillion dollars.  The unprecedented move by the FOMC that through the doors open for unlimited asset buying was only able to inspire the bulls for a brief moment yesterday, ultimately closing lower on the day.

With pressure rising, the Olympic Committee has decided to postpone the start of the Summer Games for the first time in history.  In wartime, the games Olympic’s experienced full cancellation 3-times but never a postponement.   Just another item for the history books alongside the fastest 30% market decline ever.  The President said in comments yesterday that he expects a quick recovery for the market. However, reports suggest he like the rest of us is concerned the recovery will be a slow process due to the company level damage and unemployment. 

Technically Speaking

With the futures pointing to a substantial gap up and the hope that Congress might get its act together passing the massive stimulus bill, we could finally see a little relief from the selling.  Unfortunately, with infections approaching 45,000 and more than 525 reported deaths here in the US, it’s challenging to be in a celebratory mood.  The QQQ has the best chance of recovering its 500-day average, but even with the big up expected this morning, the bulls will have to deal with if as resistance. 

We will get the latest reading on the PPI and New Home Sales, both of which expect declines according to consensus estimates.  As the coronavirus impacts trickle into the earnings and economic reports, we could see volatile price swings that traders will have to consider when holding positions overnight.  I suspect the road to recovery will be a very bumpy one with dangerous whipsaws and flat our reversals to challenge trader skills. Don’t forget that consistent base hits win games, not the exciting home runs.  When the recovery begins, don’t allow greed to prevent you from taking those base hit trade profits.  To be a consistently profitable trader, we have to get comfortable with taking profits consistently.!

Trade Wisely,

Doug

Futures had a bit of a temper tantrum last night after the Senate failed to pass the massive stimulus bill.  We can expect significant price sensitivity through-out the day as they legislators scramble to resolve issues and vote again later today.  A passage could trigger a quick rally, but a failure could really bring out the bears, so keep an eye to the news as they wrangle party politics.

Asian markets closed mixed but mostly lower as Hong Kong and Australia saw heavy selling during the night.  European markets continue to tumble with the FTSE down another 3.5% as the coronavirus continues to ravage the euro block.  With tremendous overnight volatility, US futures point to a substantial gap lower this morning that will test the lows of last weeks as support.  Hang on for another wild day of price action.

Economic Calendar

Earnings Calendar

On the Monday earnings calendar, we have over 80 companies stepping up to report quarterly results today.  However, after looking through the list, I don’t see any particularly notable or market-moving reports.

Top Stories

After another volatile evening where the futures briefly dropped to limit down, they point to a substantial gap down this morning.  The massive stimulus bill failed to pass last night but will try once again today.  If passed or fails to pass, it’s likely to be a market-moving event, so keep an eye to the news as we progress through the day waiting on the vote.  

The Olympic committee is under pressure to postpone or cancel the Summer games hosted in Japan due to the virus concerns.  Canada and Australia are the first countries to announce they will not send athletes should the games move forward as scheduled.

Last evening the President activated the National Guard in New York, Californa, and Washington to expedite the moving of medical supplies and equipment as their outbreaks continue to grow at an exceptional rate. 

Technically Speaking

The QQQ had the best chance of recovering the 500-day average last week, but on Friday left behind a very disappointing bearish engulfing candle.  This morning the four major indexes are set to open at or below recent market lows.  Although most charts paint a pretty grim picture, there was an effort by the bulls to defend the week’s lows.  In a surprise and very bold move, Goldman upgrades BA suggesting they have enough cash to get through the crisis and that air travel will return following the crisis.  I assume the Goldman is also anticipating that the government will swoop in with a considerable bailout for the company in an attempt to prevent massive layoffs.

We can continue to expect extreme price volatility and sensitivity to the congressional vote on the stimulus bill.  I would not rule out the possibility of a quick and substantial rally should the bill pass.  However, another failure to pass could easily trigger another sharp selloff that could easily trip circuit breakers.  Keep in mind no matter what happens, holding positions overnight will remain very dangerous due to the overnight swings.  I think a V-bottom recovery is unlikely because we are still weeks if not months away from seeing an improvement in the war against the outbreak.

Trade Wisely,

Doug

A ray of sunshine begins the market day with the first bullish follow-through open setting up this morning. It’s been nearly 2-weeks since we have seen a positive close followed by an optimistic open the next.  That said, expect the wild price volatility to continue as infections here in the US begin to spike heading into another uncertain weekend. 

Asian markets closed mixed but mostly higher as China holds steady on its price rates.  European markets are green across the board this morning, reacting to the massive government stimulus efforts.  The US futures point a positive open ahead of economic and earnings data but expect the price action to remain very challenging.

Economic Calendar

Earnings Calendar

On the Friday economic calendar, we have 59 companies reporting.  Looking through the list about the only notable stock I can find today is HIIB.

Top Stories

After another turbulent evening where the US Futures traded between 350 down and 900 up currently points to positive open of more than 700 points.  However, with such volatility in price, anything is possible by the open. 

With virus infections beginning to rise rapidly, the California Governor ordered that all residents stay home and inside.  The first state to issue such an extreme lockdown order.  Italy now has the distinction of the largest death toll surpassing China as the country calls out the military to move coffins overwhelming the countries cemetery system.  Here in the US, infection estimates could reach more than 30,000 by next week.

The Senate has proposed a massive spending bill sending direct payments to US citizens of $1200 per adult and $500 per child, including billions and billions for company bailouts.  I doubt this will be the last of the backstop measures that will be required to stabilize the economy. 

Technically Speaking

Although we saw more than a 1200 point swing the in Dow yesterday, it was nice to see a positive close.  As of now, it looks as if we could get our first bullish follow-through open that we have seen in 2 weeks of massive overnight reversals.  Crossing my fingers and hoping it will hold at least to the open, the QQQ could recover its 500-day moving average.  The technical damage in the charts is so extreme that even a hold of this week’s lows could lift spirits as we head into another uncertain weekend.

Although there are some fantastic values in stock prices, buying them in the faces of such volatility and extreme uncertainty is not for the faint of heart.  With the VIX holding above a 70 handle options are punishingly expensive, and the slippage in the bid/ask spreads make then nearly impossible to trade except for very quick and very dangerous day-trades.  Let’s all hope for the best but prepare for the wild price action to continue in the coming weeks as impacts of the outbreak continue to expand.  Protect your capital, take care of your family, and support your communities as best you can through these troubling times.

Trade Wisely,

Doug

I had a computer problem this morning, so I apologize, but I will have to keep the blog short this morning.  After another wild night of price action in the futures market, it would appear sellers still have the upper hand this morning.  Even the so-call safe-haven securities sold off yesterday in a rush to raise cash and avoid additional market risk.  During the night, the ECB unveiled a massive stimulus plan of more than 800 billion with the President signed the first stimulus package for the US almost immediately after the Senate passage.  They are now going to work on the second package that could top 1.2 trillion with direct payments to US citizens.  Monday, tradings pits will close, and we will move to a fully electronically traded market.  It’s unclear how that might affect price action. 

With infections numbers continuing to grow, we could easily see more than 10,000 cases by the weekend, which would suggest and exceptional expansion is likely to occur over the next 2-weeks.  I know I sound like a broken record but Protect Your Capital because the uncertainty going forward is expected to get much worse before it gets better.  More importantly, protect yourself and your family.  The next few weeks could be difficult, but I’m confident better days lie ahead.

Economic Calendar

Earnings Calendar

We have more than 120 companies reporting earnings today, but in the current situation, it’s unlikely many will notice.  Notable reports include DRI, LEN, CAN, CTSAS & OLLI.

Trade Wisely,

Doug

As violent price gyrations continue, so does the extreme danger for retail traders.  Although we have had several big one day rallies, we have yet to see the bulls able to follow-through the next day.  Instead was we see is overnight reversal ripping the heart out of traders that tried to hold positions just one more day.  This morning is a repeating that pattern once again with US Futures limit down wiping out most if not all of yesterday’s hopefulness. 

Asian markets seesawed back and forth overnight, finally closing the day lower across the board.  European markets are sharply lower this morning with the DAX, FTSE, & CAC, all showing losses fo more than 5%.  Ahead of a Housing Starts number and 60 earings report Dow futures to point to an overnight reversal of more than 800 points, and fear and uncertainty continue to drive extreme price volatility.  Prepare for another wild day.

Economic Calendar

Earnings Calendar

On the hump day earings calendar, we have about 60 companies reporting results.  Notable reports include GIS, FIVE, GES, HABT, TLRD, TCOM, & WSM.

Top Stories

Biden swept three primary elections last night as he doubles the delegate lead over Sanders can drawing closer to clinching the Democratic nomination.  President Trump has now won enough delegates to lead the Republican party in the 2020 election. 

After a day of rally closing the Dow up more than 1000 points, futures now point to an overnight reversal wiping out the gains waiting on yet another government bailout proposal to be passed.  Munchin reportedly warns senators the impacts of the virus could lead to a 20% US unemployment rate as a business shutdown responding to CDC recommendations.

The Vegas strip is quiet for the first time since the Kennedy assassination as all gaming in the state was ordered to shut down.  Kansas schools have closed public schools for the rest of the year!  The first such state to make such a drastic decision. 

Technically Speaking

Yesterday’s relief rally was a nice change to the extreme selling pressure, but sadly it looks as if a second day of follow-through is too much to ask for amid such wild volatility.  After another wild night of price, action futures reached another limit down trading halt.  The QQQ rally moved up to test the resistance of its 500-day average, but sadly the overnight reversal will wipe out almost all of yesterday’s hopeful gains at the open.

With the VIX closing, the day above a 75 handle, and a likely sharp move higher this morning options, prices will remain very dangerous and virtually untradeable.  While there are some tempting values in stock prices, the volatility requires a tremendous tolerance for risk that few retail traders are willing to ride out.  The best course of action for most is to continue to remain disciplined to your trading plan and protect your capital while market prices continue to gyrate violently. 

Trade Wisely,

Doug