Morning all.
After one of the worst days for the stock markets in recent history, multiple central banks and governments outlined plans for economic stimulus, which has boosted sentiment and coincided with China and South Korea reporting progress in containing the Coronavirus spread.
$DJ30 futures are pointing to strong opening day and likewise, the $SPX500 and $NSDQ100 are following suit. There are some big gaps to the opening prices on futures from Sunday night and I’m wondering if these levels will become targets for traders this week.
JP Morgan released an investment note yesterday that told clients to sell any strength in the markets as there is worse to come and if this is the case, there is good reason to look at securing some profits before any dead-cat bounce gets exhausted. Very hard to judge this though.
Looking at the Nasdaq, to close the gap, price needs to get to around 8,500. From yesterdays lows around 7,825, that’s a move of 8.6% which I’d say is considerable if it was going to be viewed as a dead-cat bounce.
If we are going to see market strength for now, $GOLD might start to weaken following the boost it got when the virus outbreak was suddenly taken as a very serious global event. If this happens then $GDX which I started buying into recently as a way of staying in equities but also gaining exposure to Gold, could fall and offer up better value.
I will invest further into this one on the basis that things are looking tricky for markets this year and weakness in Gold could end up being temporary. I really don’t like Bonds at these crazy low yields and so this is one of my compromise safety investments which can hopefully pay off in a variety of outcomes this year.
I’m not sure if anything will move far enough to secure profits today, but it will be good to see some drawdown recovered and if the strength can extend into tomorrow, opportunities to lock-in some gains could be on the cards.
All of this is of course dependant on bad news about the virus spread not spooking markets gain, and this is far from certain at this time with many health experts suggesting worse is definitely to come.
Thanks for your time.
