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. 

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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