Markets aren’t falling apart, so I count that as a win. We swept the low from December 2018 yesterday, which should provide support for at least a little while. Markets have fallen for a month straight. Even at its worst, the market needs to take a breather.
SPY Weekly Chart
Crude oil is up almost 20%, but that’s sort of expected after its horrible rout. Silver still hasn’t made any attempt at a comeback. That’s an interesting long-term play (SLV is the ETF). I can’t see silver or oil staying down here forever. However, the USO doesn’t do a great job of tracking crude in the long-run.
Right now, options are becoming virtually untradeable in many cases. That’s why I’ve stuck with the most liquid ones. Otherwise, you’re looking at bid/ask spreads as wide as Kansas. Those aren’t smart areas to play as they favor the market maker.
In regards to the Coronavirus – we’ll start getting more information in the next 2-3 weeks. That’s when testing starts rolling out nationwide. If we’re able to follow a model of South Korea and do extensive testing, we stand a better chance of coming out of this sooner rather than later.
Otherwise, this is likely to last through the summer into August. Until we either have a vaccine or herd immunity (enough people catch it and build up an immunity – which isn’t a given), markets will struggle to price in the future.
I can tell you that the U.S. Government will not allow certain companies to fold. Boeing (BA) isn’t about to go under. They won’t allow the only airplane manufacturer in the US to go belly up. That ain’t happening.
Companies that benefit from folks staying at home and/or panicking are doing really well. Amazon (AMZN) is finally catching some steam as home deliveries ramp up. Blue Apron (APRN) has been all over the map today. Netflix (NFLX) has shown remarkable strength. Costco (COST) and Kroger (KR) both look fantastic as well.