D&D Note (4.6.2020) ~ Hope Fuels Rally ~
Markets rallied in Futures last night on the back of a JP Morgan note saying that it is likely we’ve put in a bottom in March and while can still retest lows we are now likely to not test lower lows.
Markets gapped up on the open today with further hope that virus cases are slowing in hotspots. Although that’s the current hotspots and as we know new ones are popping up across America like Florida, Tennessee, Michigan, and Pennsylvania. The economy is still turned off until the end of April. Experts also agree the peak virus cases in the US is still about a week or two away.
Coronavirus deaths in the US topped 10,000. New York cases have leveled off now for two straight days.
Indices on the day all saw strong gains of over 7%. And all took a further leg higher in final 10 minutes of trading closing near the highs of the day. Circuit breakers don’t take effect in the final 30 minutes of trading otherwise we would have hit the one day 7% circuit breaker to halt trading for 15 minutes. In the final last minute of trading we came off intraday day high by half a percent that was set the previous minute. Volume overall was about 20% higher than average.
DOW up 7.73%
S&P 500 up 7.03% (highest since March 13)
NASDAQ up 7.33%
Asian and European markets rallied overnight, however India did not participate in the rally seeing the Nifty fall 2%.
The OPEC meeting has been delayed from today to now Thursday. NYMEX Crude fell 6.92% on the day.
The VIX was down today around 5% maintaining a 40 handle of 44.84 which is still well above the YTD average but off the recent highs.
Gold rallies 2.83% and Dr. Copper also rallies on the day up 1.37% (As of equity market close).
Small Businesses continue to say there are problems and issues getting their SBA loans fulfilled. The actual SBA loan platform crashed for hours today. Currently $38 Billion has been paid out. But since it is a first come first serve basis many worry the more established companies are going to get all the money and the Mom & Pop small businesses are going to get left out in the cold. Which has been prompting Democratic leaders to already start calling for the need of a 4th stimulus bill.
~ Dave James / Principal Trader and Market Strategist