Stocks enjoyed a prolific April despite terrible news. The disconnect between the stock market message of strength in April to the overall economy's slump of the worst short term performance since the Great Depression is unmistakable.
Stocks enjoyed a prolific April despite terrible news. The disconnect between the stock market message of strength in April to the overall economy's slump of the worst short term performance since the Great Depression is unmistakable.
Is the 34% rebound since the low on March 23 the start of a new bull market or merely a false peak we will all forget when the bear market returns? Dig into the market and earnings reports in the coming quarters could be devastating.
Goofball investors, ignoring the current plight on Main Street, might think that United Airlines is the bargain of the century at half its book value. In reality, investors know full well what's going on, and are pricing United and other stocks that have lost the bulk of their revenue for their foreseeable future.
The same goes for Ford. Anyone expecting a rapid return to normalcy should instead expect a couple of bad quarters. By the way, Ford is once again trading at the same level it did in 1986.
However, the recent gains of the market as a whole are unmistakable. Below are some of the best performers:
+29.7% - S&P 500 Energy Sector (Best Month on Record*)
+20.5% - S&P 500 Consumer Discretionary (Best Month on Record*)
+15.4% - Nasdaq Composite (Best Month since June 00')
+15.0% - Nasdaq Biotech (Best Month since July 08')
+13.7% - S&P 500 Technology (Best Month since November 02')
+13.7% - Russell 2000 (Best Month since October 11')
+12.7% - S&P 500 (Best Month since January 87')
+11.1% - Dow Industrials (Best Month since January 87')
* - The energy and consumer discretionary sectors go back to 1989
Where the Major Indices Stand Today
The Dow Jones
Close price (futures contract) on May 1, 2020: 23,584
Gain/Loss for the week: -0.31%
Prior date of price range before pandemic: January 8, 2019
Value Loss Period: 479 Days
The S&P 500
Close price (futures contract) on May 1, 2020: 2,817.00
Gain/Loss for the week: -0.44%
Prior date of price range before pandemic: August 26, 2019
Value Loss Period: 249 Days
The Nasdaq 100
Close price (futures contract) on May 1, 2020: 8,702.00
Gain/Loss for the week: -0.76%
Prior date of price range before pandemic: January 8, 2020
Value Loss Period: 114 Days
Overall it was another down week for the major indices. The Dow performed best with a loss of -0.16%, followed by the S&P 500 with a loss of -0.30%, leaving the Nasdaq 100 performing the worst with a loss of -0.60%. The week had a promising start but gave everything back on Thursday and Friday. Primary trends are still up and resistance levels continue to close the price gap which could open things up for another down move.
As we've stated before, it's a fool's game to time the market or to try and jump in and buy at a discount. A properly built portfolio with appropriate levels of diversification, volatility controls, non-correlated assets, risk/return biases, and void of emotions will help ensure you are positioned for the longterm success.