Another Day of Losses as Market’s Mood Sours

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The market’s mood has taken a turn for the worse in recent days, as cautious comments from Fed Chair Jerome Powell today gave stocks their second straight session of sharp losses.

The Dow hasn’t finished in the green yet this week and slipped another 2.17% (or around 516 points) on Wednesday to 23,247.97. The S&P was off 1.75% to 2820.

The NASDAQ is now negative again for 2020, having dropped more than 3% in the past two days after an impressive six-day winning streak. On Wednesday, it was down 1.55% (or about 140 points) to 8863.17.

Unlike yesterday, the indices did come off their lows late in the session. The Dow was down by well over 600 points at its worst today. 

Stocks ignored horrible jobs reports last week and posted solid gains, but now they seem concerned that the rebound may be more challenging than hoped as parts of the country gingerly begin to re-open their economies.

And Mr. Powell’s comments this morning underscored the nervousness. He sees an uncertain future with plenty of downside risks that may require even more help from the Fed moving forward.

Given the souring mood of the market, anything short of the Chairman declaring victory over the coronavirus would probably have weighed on stocks today.

Importantly though, he did say that the economy would be poised for a big rebound once we can successfully get past the virus.

But, of course, that’s easier said than done. And now the market is setting up a pretty rough week. Investors had been growing increasingly uncomfortable about the market continuing to rise despite very soft economic data, so this nearly 4% pullback in two days shouldn’t be considered a surprise.

We’ll probably be switching between periods of hope and anxiety until we get some good news on medical breakthroughs or the economic re-openings. So let’s see what tomorrow has in store for us…

Today's Portfolio Highlights:

Surprise Trader: Let’s not forget our furry friends during all this coronavirus craziness. Dave certainly hasn’t, as he picked up a 12.5% allocation in Covetrus (CVET) on Wednesday. This company provides animal-health technology and services. More specifically, it combines practice management software, prescription management, multi-channel client engagement services and supply chain infrastructure to promote connectivity between veterinarians and their clients. CVET has an impressive Earnings ESP of 41.67% for the quarter coming after the bell tomorrow. The editor also sold Benefitfocus (BNFT) today to make room for new names. Read the full write-up for more.

Counterstrike: A couple weeks ago, Jeremy made a few bearish moves because he knew the market wouldn’t be able to run so hot for too much longer. And today those moves really paid off, especially ProShares Ultra VIX Short-Term Futures ETF (UVXY). This fund jumped 15.2% on Wednesday as the S&P dipped 1.75%, making it the top performer of the day among all ZU names. Also, his short in Planet Fitness (PLNT) brought 7.9% and his position in ProShares UltraPro Short Dow30 (SDOW) earned nearly 6.5%. “So far, I feel like we have done well staying nimble and trading both sides of this market. Lets maintain our strategies and keep picking our spots with patience,” said the editor.

All the Best,
Jim Giaquinto

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