Crude oil was the determining factor for market direction all week. It all started four days ago when crude oil traded into negative territory for the first time ever, trading down negative $37.63 a barrel, a decline of some 305%, or $55.90 a barrel. That drove the stock market down early in the week.
However, as crude oil tried to bounce back the rest of the week, it failed to wipe out its early week losses, but it wasn't enough to end the week in the green for crude oil or stocks for that matter. Continue reading "Crude Oil Dominates Market Action"→
The Coronavirus originated in and hit China first, so it should be expected that the Chinese economy could be used and will be used as a predictor for the U.S. economy moving forward. After all, we are talking about the two largest economies in the world.
Since the mid-1970s, the Chinese economy has had more than four decades of unbroken gains, an incredible run, increasing its domestic economy by roughly a hundredfold and transforming the global economy in the process.
But that winning streak came to a sudden and shocking end Friday. China reported a -6.8% year-over-year contraction in its economy for the first three months of 2020. That's the first quarterly decline in the gross domestic product since official record-keeping began in 1992 and likely the first since Mao Zedong died in 1976.
The question I keep asking myself is this, how long will this bear market rally last, and yes, I still think this is a bear market rally. There are zero reasons that the market was up for the week and especially for how much it was up. The DOW and S&P 500 both gained a whopping +12 on the week with the S&P 500 having its biggest one-week gain since 1974 when it gained +14%. The NASDAQ brought up the rear with a +10% gain, having it's best week since 2009. But why?
Two reasons really, the Fed and a flattening curve of the Coronavirus pandemic.
This week the Fed announced as a large number of programs, including loans geared towards small and medium-sized businesses, that will total up to $2.3 trillion. They also gave more details on its plans to buy investment-grade and junk bonds going forward.
As for the Coronavirus, the number of new daily confirmed cases has dropped globally. In the U.S. New York state has also reported a decline in its virus-related hospitalization rate, which led the markets and trader sentiment to believe that we are turning the corner, but are we? Continue reading "Can This Bear Market Rally Last?"→
With back to back rallies to start the week, we have now rallied 23% from the March 23rd lows of 2,191.86 (for the S&P 500). Is this the start of a new bull market, or is this just a bear market rally within the broader confines of the bear market? Keep in mind that we are still roughly -20% lower off the all-time high for the S&P 500, which puts us solidly in the middle of the range.
All three major indexes triggered new green weekly Trade Triangles indicating that the overall market has moved into a sidelines trend or sideways momentum as the figures above would suggest. So where do we go from here?
Honestly, I don't have a clue, and I don't think anyone else does either, but we do have the Trade Triangles to guide the way. My inclination, if I had to guess, would be that we'll continue to see high volatility as Coronavirus news will drive this market for good or bad.
As we head into afternoon trading to end the week, the stock market is trading at or near the lows of the day after U.S. jobs fell by 701,000 in March, marking the worst jobs report since 2009, while the unemployment rate jumped to 4.4%. However, the report failed to capture the full extent of the economic blow being dealt with by the coronavirus outbreak. On Thursday, the Labor Department said jobless claims jumped by a record of 6.6 million for the week of March 27.
The DOW has been down over -2.5% on the day, with the S&P 500 losing -2.3% and the NASDAQ losing roughly -2.4%. After a brief mid-week bear market rally last week, the overall long-term downtrend has returned this week with the market posting a losing week, it's third in the previous four weeks.
The DOW will post a weekly loss over two percent at -3.3%, the S&P 500 checks in with a weekly loss of -2.5%, and the NASDAQ brings up the rear with a weekly loss of -2% as well. Continue reading "Loss Of Jobs Weighs Heavy On The Market"→
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