Looks like a strong open on the back of a solid Biden showing in the Super Tuesday primary and no major new news on the spreading of the Covid-19. This wild kind of action that happens in an intermediate-term bottoming process, where you get huge percentage swings but don’t meaningfully break the low. Isn’t it just incredible to think that just a month ago volatility was historically low and everyone was hoping for a little bit of a correction so they could buy stocks cheaper. As is always the case, corrections are only desired until you are in one.
Yesterday the Fed did an emergency rate cut in a response to the developing economic weakness on the back of the Covid-19 impact. Companies are still suggesting workers prepare to work at home and many are cancelling conference appearances. The net result is sure to be slower economic growth and the increased possibility of a mild recession. Buckle up, today is sure to be another volatile one.
Our view remains the same…expect (1) a multi-week reflex rally, then (2) a test of the low as the weaker economic and corporate date begins to be released. The good news is the multi-week rally comes first so we can feel a bit better for a little while. We all need a break.
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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