D&D Note (4.8.2020) ~ Hope ON = Risk ON ~
Markets look forward in time and are priced for future earnings. With Italy, Spain, and New York all seeing virus cases leveling off give Hope that we are getting closer to being able to turn economies back on. Anthony Fauci also had a positive outlook today siting a possible turnaround in the Coronavirus starting. Another round of Fiscal Stimulus looks to be coming with a number of $500 Billion being floated around. These elements all helped boost stocks.
DOW up 3.44%
S&P 500 up 3.41%
NASDAQ up 2.58%
Keep in mind all we really did today was reverse the failed rally yesterday and essentially closed today where we had rallied to yesterday before falling.
America is still not doing anywhere near the level of testing needed to accurately gauge the extent of the virus spread. This creates uncertainty however as of today the market is overlooking that and acting on a basis of Hope ON = Risk ON.
Volume was down 20% from yesterday as Passover begins and as we head into the Easter weekend. The VIX still remains elevated at 43.13 but did fall over 7% today.
The S&P 500 is now 23% above the March 23 low. This technically means we have moved into Bull Market territory. However nobody has any certainty that we’ll remain elevated and won’t just fall back down to retest lows. The only thing that is certain is we will continue to have volatility.
Oil zoomed higher at the end of trading gaining 10.75% ahead of the OPEC meeting tomorrow.
Bernie Sanders drops out of the race for President opening the door for Joe Biden to now be the nominee.
~ Dave James / Principal Trader and Market Strategist