Bulls Looking to Open New Week with a Bang
Without jinxing anything, the weekend seemed on the “quieter” side regarding the news. While it remains bad, things didn’t accelerate to the downside so that’s something. After an abysmal jobs report on Friday, stocks were not down all that much after finishing with a flurry. As I always say, it’s not what the news actually is, but rather how stocks react. A 30%+ decline prices in a lot of the bad news we are seeing and what’s in store down the road.
Futures are soaring in the pre-market. That’s likely to hold into the open and my sense is that it will be a big up day. Lots of people will feel relief. I may have to umute the TV and see if we hear talk of “THE” bottom being in and no more selling. That would run counter to what was said late last week with so many forecasting much lower prices, including Guggenheim.
In the very short-term, there are two price levels to watch in the major indices. Both are depicted by the blue horizontal lines below. Closing above both of those would do a lot to confirm a return to more normal price behavior and less of the crazy swings.
Assuming we do see the big rally indicated, this would be an opportune time to see which sectors lead and lag. I would imagine the small and mid cap stocks lead, but that’s only because they have been decimated. Let’s also see how high yield bonds behave as they have quietly been performing better than the stock market in the face of widespread defaults.
While I don’t think the markets are out of the woods, each day and week are getting us closer to more constructive action. Markets need time to heal their deep wounds before they begin the assault on Dow 30,000 in 2021.
