D&D Note (4.29.2020) ~ Remdesivir Lifts Markets… Again ~
The market today trades on a glimmer of good hope. Case in point we have already seen a lift from the Gilead (GILD) drug Remdesivir before on positive news. Then fell due to negative news on the drug. Today we once again got a lift from positive news on the drug.
It’s still largely the 5 big stocks that everyone has been hiding out in which on daily basis direct the trajectory of the market: AMZN, AAPL, GOOGL, FB, MSFT. There is is $5.1 Trillion camped out in just these 5 stocks and all are in technical overbought territory.
DOW up 2.21%
S&P 500 up 2.66% (2939.51)
NASDAQ up 3.57%
VIX down -6.37% to 31.43 (lowest level since Feb 26th)
Oil up 24.47% to $15.36
Reality? U.S. GDP drops 4.8% in the first Quarter while economists had only expected a 3.5% decline. We are already in or without a doubt going into recession. Estimations are the 30 million Americans have filed for unemployment. Consumer spending dropped 7.6% and what Americans spend makes up 67% of our GDP. Second Quarter GDP estimates are for a contraction between 20% to 45%.
The FED held its meeting today and held rates same saying virus poses big risks over medium, term. They see weaker demand, lower oil prices holding down inflation. FED further says that the health crisis to weigh heavily on economic activity. They are going to continue treasury, MBS buying in amounts needed.
While stocks are in touching distance of the 200 day moving average there is still a major disconnect between market prices and reality. Cruise line companies rallied 10%-20% today. Nobody is going to go on a cruise for a least a year. It will be very hard for the market to push much higher before the Bears take back over and push markets back lower.
Texas Covid-19 cases rise 3.4% to 27,054 and deaths now at 700.
There have now been more people to die from Coronavirus in America in just a couple of months than all the American casualties from the Vietnam War.
Globally virus cases top 3.1 million and deaths pass 219,000.
~ Dave James / Principal Trader and Market Strategist