Beating The Coronavirus Will Be The Ultimate Buy Signal

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Posted: Mar 31, 2020 12:33 PM
Beating The Coronavirus Will Be The Ultimate Buy Signal

Source: AP Photo/Richard Drew

The market started the week off right. Although I must point out that the market breadth wasn’t as bullish as the closing print for the major indices, which all advanced more than 3% on the day. There was just as much downside volume as upside on the NYSE, and significantly more 52-week lows than highs on both exchanges.

Market Breadth

NYSE

NASDAQ

Advancing

1,785

2,007

Declining

1,212

1,259

52 Week High

4

15

52 Week Low

59

40

Advancing

2.61B

2.31B

Declining

2.53B

1.16B

 

Technology and Health Care dominated the session, while Energy and Financials lagged well behind.

 

S&P 500 Index

+3.35%

Communication Services (XLC)

+3.65%

Consumer Discretionary (XLY)

+2.09%

Consumer Staples (XLP)

+3.91%

Energy (XLE)

+1.02%

Financials (XLF)

+1.90%

Health Care (XLV)

+4.68%

Industrials (XLI)

+1.46%

Materials (XLB)

+3.19%

Real Estate (XLRE)

+2.60%

Technology (XLK)

+4.21%

Utilities (XLU)

+3.70%

 

The biggest winner was Autodesk (ADSK), which we added to the Hotline model portfolio. Meanwhile, drug company stocks which spent much of the year under pressure as the epitome of corporate greed on the campaign trail.

Now, we’re greeted each morning with more hope and confidence, as medical companies continue to step up with testing options and new vaccine hopes.

Beating the coronavirus will be the ultimate buy signal, and that’s why the signs of flattening the curve are more important than economic data. Yesterday, signs of virus cases flattening in several states helped the market remain higher.

Right now, this is the only thing that matters on Main Street and Wall Street.

Portfolio Approach

We are back to 15% cash after adding a new Hotline position to the model portfolio yesterday.


The best news yesterday was the USNS Comfort and the USNS Mercy arriving in New York and Los Angeles.

Today’s Session

As ore anecdotal data becomes available, the more economists get to sharpen their pencils, Consequently, worst-case scenarios just become more dire for the second quarter.

Federal Reserve

  • Estimated layoffs in second quarter 2020 = 47.05 million
  • Unemployed persons in second quarter 2020 = 52.81 million
  • Unemployment rate in second quarter 2020 = 32.1%

Goldman Sachs

  • 1Q GDP -9%
  • 2Q GDP -34% from -24%
  • 3Q GDP +19% from +12%
  • Unemployment 15% mid-year

While the numbers are dire, snapback assumptions are also improving as well.  The good news is the more a worst-case scenario gets baked into the market, the less it impacts investors if accurate.