Dow sinks, virus pushes it to sharpest quarterly plunge in over three decades

With Q1 ending with the Dow’s biggest decline since 1987 and S&P its worst since 2008 and with the mounting evidence of massive economic disruption from the pandemic, the Dow fell 410 points.  And with 13.1 billion shares traded, some say this is just fence-sitting, with the real decisions being made later this week when jobless and payroll data comes out.  Since it’s a foregone conclusion that these reports will not be positive, we’re likely to see more selling then.  They said last week that this week would be grim.  And we’ve only just begun. 

Wall Street rallies, led by healthcare jump

There are certain stocks that are benefiting from this crisis, particularly healthcare, and it was the resurgence in that sector that caused the Dow to jump nearly 700 points today, particularly on the news from J&J about winning government funding to develop a vaccine.  Last week the Dow had its biggest weekly gain since 1938 but the three major indexes are still more than 20% down from their highs.  Still, this is a considerable improvement on the 30% down from the week before.  But investors brace for upcoming data that is likely to confirm the damage to the economy.  Over the weekend, JP Morgan put out dire forecast numbers:  GDP down 10% in Q1, 25% in Q2.  Volume was down to 12.2 billion which may be indicating that the panic is slowing a bit.  Or investors are on the sidelines looking for an entry point. 

Succinct Summations for the Week 3.27.20 (plus Returns From the Bottoms of Bear Markets)

Below is the weekly Sunday night summation, the main positive being the $2T stimulus and, until shortly before close on Friday, a market rally.  The big negatives are that we now lead the world in COVID-19 infections, we have a massive shortage of medical gear, and jobless claims went from under 300,000 to over 3 million in one week.  The bonus this Sunday night is a very telling chart detailing every single market downturn since 1929, how bad each one was and how long it took to recover.  Quite revealing.  Everyone please stay well. 

Some Thoughts On Winning Trades

We're at the end of a very terrible week with the infection rate over 120,000 and the death toll over 2,000 so I thought I'd provide a diversion this weekend and instead provide some positive talk about trading.  In view of this I provide the graphic below which I found this week on TradeWiki.  At first, the numbers appear grim.  80% of all traders quit after two years, half of those after only one month, 93% after five years.  Only 1.8% of all traders are profitable.  But reading between the lines, I see a very positive message.  If 98% of traders lose money, if 88% of all trades are losers, that means that the AVERAGES are heavily skewed toward the losers. 

Stocks down on virus' economic toll; dollar falls further

With the stimulus bill passed, the market focused more sharply today on the disease itself and with U.S. confirmed cases now surpassing 100,000 and deaths exceeding 1500, the Dow dropped over 900 points and much of this in just the last half hour as the updated death count came in.  The dollar also fell but this was seen as a positive meaning that central bankers were being successful in easing monetary stress.  Of course, as much as the markets wanted the stimulus, it’s clear that stimulus alone is not enough but only when the uncertainty of this pandemic is relieved will the markets improve, quite a change from a few days ago when the experts all said investors were more interested in the reaction than in the disease.  First the curve must flatten, then there’ll be the question of how long to return to normalcy thereafter.  And when we do return to normalcy, does the curve go parabolic again?  These are the questions that haunt.  This was a bad week for the world and the country but the market improved because of the stimulus.  Next week, with no stimulus and only the pandemic, what will happen?  The keys are: where is the peak, how long for the lockdown, and will China suffer a second wave?  Volume was 13.4 billion. 

Dow wraps up strongest three days since 1931

Today marked the three strongest days since 1931 with the Dow zooming up over 1300 points, again over widely accepted speculation that a stimulus bill is coming shortly.  The Dow is now 21% up from the Monday low, the S&P down 22% from its February high, all considerable improvements over a week ago and considered by some experts to be indicative of a possible bottoming process.  Also kicking the indexes up was the claims last week for unemployment benefits coming in at just under 3.3 million where the forecast was 4 million.  The VIX also dropped almost 3 points which also could be indicative of a bottoming process.  Volume was 15 billion. 

S&P 500 rallies for second day as investors await $2 trillion aid package

Wow, the Dow was up almost 1500 points as late as 3:30, all on expectations that the stimulus would pass today.  Then in the final minutes, the bill ran into yet another snag and it dove a grand closing up 495.  After senior senators of both parties said an agreement had been reached, there were last minute challenges, particularly from Bernie Sanders, over language in the bill regarding jobless benefits.  The next thing we knew top Republicans were calling for a minimum of another 24 hours to further study the bill.  Still, it is widely expected to pass and thus provide the markets with assurances that “the world is not falling apart.”  Data due on Thursday is expected to confirm that the jobless rate has reached one million.  The S&P remains down 27% from its high but that’s a lot better than the 34% on Monday.  Volume remains extreme at 16.9 billion.