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Market Direction Week Review: This has
been 4 weeks of the market on a seesaw. One week the stock market is up and one
week the market is down. Any investing should be done with caution and until there
seem to be some stability volatility remains front and center.
Stocks
recorded one of their best weekly gains on record, as some encouraging trends
in global coronavirus infection and hospitalization rates lifted hopes that
stay-at-home orders might soon be eased. The most beaten-down asset classes
fared best, with small-caps outperforming large-caps and slower-growing value
shares outpacing higher-valuation growth stocks. The same was true among sectors
of the S&P 500 Index, with energy shares and financial services shares
regaining some lost ground, while consumer staples stocks lagged. The gains
brought the large-cap indexes and the technology-heavy Nasdaq Composite Index
within 20% of their February highs—or out of bear market territory, according
to some definitions. U.S. markets were closed Friday in observation of the Good
Friday holiday.
Markets
got off to a strong start for the week, traders attributing the turn in
sentiment to an easing toll of new coronavirus infections and fatalities in
several global hot spots, including Italy, France, Germany, Spain, and New York
City. Markets carried that momentum into Tuesday morning, after China reported
no coronavirus-related deaths for the first time, while Germany was seeing more
recoveries than new cases and Italy stated it will end portions of its lockdown
on May 4. New York reported a new spike in deaths on Tuesday and Wednesday, but
investors appeared encouraged that new hospitalizations continued to slow. The
University of Washington’s widely watched model predicting the course of the
outbreak also significantly lowered the expected number of fatalities in the
U.S.
Markets
were closed for the Ching Ming holiday on Monday. Taking their cue from the
rally in global markets on better coronavirus numbers, they opened higher on
Tuesday. From the previous Friday to Thursday, the Shanghai Composite and CSI
300 large-cap index both rose by around 2.2%.
China
ended its lockdown of Wuhan, the original epicenter of the coronavirus
outbreak. Travel hubs were reportedly extremely busy after an 11-week lockdown
as stranded Lunar New Year travelers and migrant workers were finally able to
return home or to their place of work. Fear is still evident, as some traveled
in full protective clothing. On the other hand, many Wuhan residents were
reported to have visited popular local beauty spots, an encouraging sign that
normal behavior may return quickly in the absence of a second wave of
infections.
How the market finished last week, the S&P 500 up
12.1%, the Nasdaq up 10.6%, and the Dow up 12.7%.
Market Direction This Week:We track the stock
market based on our Bullish and Bearish Alerts a new Bullish Alert
recently started on 4/10/20 and we suggested to our followers they can trade any
new long positions based on are model. We will continue to provide you the
current stock market conditions as they develop. The current stock market
environment is in an uptrend (see Market Direction Mid Week Update: Trading Strategies).
The coronavirus outbreak and its effect on
businesses and the economy will remain a focal point among market participants
this week.
As
of Sunday morning, confirmed coronavirus cases neared 1.8 million globally with
over 110,000 total deaths, according to Johns Hopkins University data. Over the weekend, total deaths
in the U.S. topped those in Italy. There were more than 530,000 confirmed cases
in the U.S. and 20,608 deaths.
“In
a country the size of the U.S., cities and regions will be at different stages
of their outbreaks at different times. It is possible that some lesser affected
regions begin to relax restrictions over the coming weeks, although the
majority of the U.S. population will probably remain in lockdown until the end
of this month,” Capital Economics wrote in a note April 9. “Furthermore, it is
possible that some restrictions might need to be re-imposed if a second wave of
local outbreaks occurs, as we’ve seen in Asia.”
Earnings season kicks off with big banks gearing up
to report earnings this week. JPMorgan Chase and Wells Fargo will report
Tuesday, Bank of America, Citigroup and Goldman Sachs are schedule to report
Wednesday and BlackRock will round things out on Thursday.
“Given
the speed and severity of the economic impact, earnings season (which begins
next Tuesday with some of the big banks reporting) is set to be very
challenging as earnings growth is likely to be negative and near-term
visibility for most companies will be clouded or even suspended.* The biggest
question for investors will be whether this is a temporary COVID-19-induced
interruption that should see a sharp rebound after the virus dissipates or if
there is permanent damage to the longer-term earnings power of companies.”
Raymond James Chief Investment Officer Larry Adam said in a note April 9.
The
standard caveat still applies; “President Trump’s tweets still trump everything
else”.
Economic Calendar: Import Price Index (4/14), Retail Sales (4/15), Beige Book (4/15), Weekly Jobless Claims (4/16), Consumer Price Index (4/9)
Some of the major earnings announcements on
deck: JPM, JNJ, C, UNH, SLB.
$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you
to monitor positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we
may issue advising a change in the current market direction. Stay tuned
and follow us. If you have a testimonial or comment
of how this website has helped you we would like to know, email us.
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