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Profit from the Pros By Kevin Matras Executive Vice President
S&P Almost Out Of Bear Market Territory
Image: Bigstock
Stocks closed modestly lower yesterday, after giving up strong gains earlier in the day.
All eyes were on the S&P as it looked like they were going to exit their bear market.
As you know, the Dow came out of their bear market on March 26th when it closed up by more than 20% from their lowest close just three days earlier.
The S&P, as of Monday's close, was up by 19.05% from their lowest close. And they were set to follow the Dow out of bear market territory yesterday. All they needed was a close at or above 2,684.88.
After getting as high as 2,756.89 right out of the gate (well above the needed threshold), they just couldn't hold on. And by the finish, they closed at 2,659.41. That puts the S&P up 18.86% from their lowest close. But within striking distance (0.96%) to reach 2,684.88 to officially shed their bear market and enter a new bull.
But I'm sure traders will attempt to scale that level again soon enough. And today would be as good of a day as any.
One reason for the late day sell-off was the pullback in oil. Crude had rallied in the last few trading sessions on expectations that Saudi Arabia and Russia would lower production given the slack demand and weak oil prices.
OPEC will hold an emergency meeting on Thursday. A sizeable cut in production should underpin oil prices. And since oil and equities have been moving together lately, a firming up of the energy market should bring gains to stocks as well.
In the meantime, market watchers will continue to look for positive signs around the anticipated outbreak peak in the U.S., which is expected to take place this week for hard hit NY.
But one thing that's becoming clear is that the scary estimates of as many as 240,000 deaths in the U.S. from the virus appear to be way too high. Many are now cutting that number to 80,000 given the success of our mitigation efforts.
While we're likely to remain stuck at home throughout the rest of the month, the sooner we peak, the sooner we can begin to reopen our economy.
Another supporting development is the administration's request for another $250 billion in small business loans. That will add to the $350 billion that was a part of the $2.2 trillion relief package passed just the other week.
Already some 225,000 loans have been approved with a value of nearly $70 billion. But that money is going fast. And it's going to a great cause – helping small business owners keep their employees and pay them.
Because when the economy finally does reopen, everybody can hit the ground running.
See you tomorrow,
Kevin Matras
Executive Vice President, Zacks Investment Research
But thanks to a developing situation involving Donald Trump, America's No. 1 tech company and $10 billion... this may soon be the most talked about stock in America.
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How often have you owned a stock that gets pummeled with no logical explanation? This is often caused by computer-driven High-Frequency Traders (HFTs). They fire off massive amounts of short trades to drive stock prices down, then profit from the rebound. Their gains come at the expense of human investors.
The good news is that Zacks has mounted a Counterstrike to catch the best of these "manipulated price drops" as they rebound. For example, we recently closed gains of +26.56%, +24.47%, and even one for +10.00% in just 1 day.
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