D&D Note (6.3.2020) ~ Don’t Fight The FED, Greatest 50-day Rally In History of S&P 500 ~
The stock market is forward looking and is a discounting mechanism. While as a human this is absolutely a horrible time for humanity, computers that drive the markets don’t have feelings.
The old adage holds true Don’t Fight The FED. Today the FED expanded the number and type of entities that can tap the muni facility. This provides further backstopping for Wall Street.
Over the last 50 days the S&P 500 has rallied 37.7% making this the largest 50-day rally in the entire history of the index.
This current market is overbought. Valuations are not cheap. This is an expensive market. But as long as the FED keeps acting this market will continue going higher.
D&D is still in a position of not buying nor selling and rather just riding the current wave being 50% invested with a cash horde waiting for price discovery. We’ll continue to ride this wave till we hit the beach and have to jump off our surf board.
The dollar continues to fall helping to boost Emerging Markets.
The NASDAQ 100 briefly hit an All Time High today.
This is a perplexing market where both the Stay at Home Trade and the Reopening Trade are both rallying at the same time.
We still see a 15% decline… sometime… before year end. Most likely sooner than later. But this current Quant driven market can easily hit 3250 on the S&P 500 before correcting.
DOW up 2.05%
S&P 500 up 1.36% (3122.87)
NASDAQ up 0.78%
VIX down -4.43% to 25.65 and is flirting with its 200 day moving average.
Oil up 0.08% to $36.84 a barrel.
Apple price target raised by Morgan Stanley to $340 with overweight position seeing App Store Growth.
Dr. Fauci yesterday said he’s concerned about the “durability” of a vaccine stating there is chance a vaccine might now even provide longterm immunity. This makes sense due to the type of virus we are facing and most likely we will have to have new seasonal vaccines every 1-3 years depending on the rate of mutation.
Global Virus cases: 6.44 million+
Global Virus deaths: 382,451+
US Virus cases: 1.84 million+
US Virus deaths: 106,696+
~ Dave James / Principal Trader and Market Strategist