As our closing comment highlighted last night, this unprecedented drop in the equity market has yet to stop despite all the actions by the Federal Reserve to date.  The reason is the country is shutting down as each community deals with “social distancing.”  Right now this is so much bigger than the markets as our communities small businesses begin to fail as people stay home, which means the last thing they are considering is what to buy in the market.  We believe the next big news item coming from the government should be to announce a facility to help these small businesses while the economy is being impacted by the Covid-19 crisis.

 

Oversold and government intervention hasn’t stopped the slide so far, but in our view is designed to help create a massive recovery once this crisis gets past peak and people start to go outside.  Until then, we expect the same plan we have had for weeks:

  • The market is so extremely oversold that it is prone to sharp reversals that are too hard to trade.
  • We should only know the initial low is made by having a multi-week rally.
  • That rally should ultimately fail as the economic and corporate data is released.
  • When the market tests the initial low, that is when we plan on becoming more offensive.

 

On a personal note – Our country is resilient, and it is during periods like this where we come together in our families, communities, and as a country.  I have seen it happen when I was walking up from downtown to midtown in NYC on 09/11.  People were giving people water to wash the ash off faces and food to eat as they walked north.  We are strong as long as we help each other, and this is one of those times.  Stay healthy and safe, and we will continue to do our best to navigate through the crisis.

 

Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses




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