D&D Note (4.9.2020) ~ Near Term Top on Overextended Rally? FED Steps In to Buy Fallen Angel Debt ~
Equity markets bounced off the top of the intraday trading range (2,818.57 intraday high on S&P 500) multiple times before markets pared gains leading into the close ahead ahead of the long weekend. (No trading tomorrow as markets closed for the Holiday weekend)
The FED steps in again today with more action for Junk Bond Market and State lending. In muni market the FED is now offering direct loans for the Junk Bonds helping the corporate Fallen Angels. Automaker Ford (F) being one of those companies now eligible. The FED also temporarily lifts the cap on Wells Fargo to allow them to lend in accordance with the SBA loan program.
Dr. Fauci says deaths in America might be as few as 60,000 which is great news on the Health front on Covid-19. This shows that social distancing is working. We can’t let up yet though and need to continue to test and see complete stabilization of the curve across all the hotspots in America.
D&D Investments used the morning strength to realize some gains in SHOP, V, and PYPL.
DOW rose 1.22%
S&P 500 rose 1.45% (2,789.82)
NASDAQ rose 0.77%
The 4th round of Fiscal Stimulus for SBA’s fell apart as Democrats push for more transparency on how the $250 Billion of funds will be spent.
The VIX is still maintaining a 40 handle at 41.49 down 4.29% after rising to 45.73 in early trading.
The 10YR closed at 0.72 with yields rising 6.67% with the note falling 5.16 basis points (Bonds work inversely where yields rise when the note sells off). The Bond market did close early today for the Holiday weekend.
OPEC+ agreed to cuts to end the price war. NYMEX Crude fell near the end of trading down 6.58% to 23.44 a barrel. Right now there is actually storage option limitations and there is no place for Oil to actually go with current lack of demand.
Gold rose into the close finishing up 2.32%
US airline traffic is down 95% from Year Over Year numbers.
Current global Coronavirus cases are now over 1.5 million and over 93,000 deaths.
~ Dave James / Principal Trader and Market Strategist