D&D Note (6.11.2020) ~ Markets Fall Over 5% Pricing in 2nd Wave Of Covid-19 Virus ~
This market was top heavy and ripe for a pullback. The FED yesterday sounded a dovish but somber tone and essentially called out the jobs report saying in reality unemployment was 3% higher and that black & hispanic unemployment continued to spike.
Now we have got a string of consecutive days of Covid-19 cases spikes and hospitalization spikes filling up ICUs.
Texas, Arizona, North Carolina, California and many other states are seeing alarming rises in Coronavirus following reopening and recent protests.
All of this together caused the market to reprice for a 2nd wave and the S&P 500 had its biggest decline since March 16th. The DOW falling over 1,800 points.
This morning when Amazon was in the green D&D took profits in AMZN along with BRK.B.
Today we broke through the 200 day moving average of 3013 on the S&P 500. The intraday low was 2999.49. This is a bearish sign and shows the recent breakout from 3000 has not been confirmed and is rather breaking down.
In the overnight futures market we are likely to gap down for tomorrows opening bell.
Retail investors via Robinhood trading app had been bidding up this market in the last couple weeks. Specifically the reopening trade. Today those stocks like airlines and cruise ships all got hammered.
Typically retail investors chase markets at their highs and buy stocks leading into selloffs, leading to the nickname dumb money.
DOW down -6.90%
S&P 500 down -5.89% (3002.10)
NASDAQ down -5.27%
VIX up 47.95% to 40.79
Oil down –8.16% to $36.37 a barrel.
Gold up 0.75% to $1733.70 an ounce.
Apple Price target raised at Bank of America to $390 with a buy position on 5G prospects.
Disney price target raised at Bernstein to $105 with market perform position on parks reopening.
Starbucks downgraded at Keybanc to sector weight position on long road to recovery.
Africa is quickly becoming a new hotspot with virus outbreaks. The WHO warns the continent will see a “steady increase” in cases until there is a vaccine.
The city of Houston Texas might reopen its virus hospital at a stadium as cases continue to expand.
India sees its largest one day spike in the virus since the pandemic began.
Global Virus cases: 7.44 million+
Global Virus deaths: 418,392+
US Virus cases: 2 million+
US Virus deaths: 113,467+
~ Dave James / Principal Trader and Market Strategist