This week of enormous daily volatility continued on Thursday with the major indices dropping more than 3% again and giving back most of yesterday’s huge rally.
If you feel like we’ve been here before, it's because we have.
Stocks soared on Monday with the Dow putting together its largest single-day points gain in history (+1293.96). The market pulled back nearly 3% the very next day with the Dow dropping 785 points.
That’s pretty much what happened the past two days as well, with the index surging more than 1000 points again on Wednesday before plunging nearly 970 points today.
Right now, if the market’s moving… it’s moving BIG!!
On Thursday, the Dow plunged 3.58% to 26,121.28, while the S&P dipped 3.39% to 3023.94. The NASDAQ was off 3.1% to 8738.6. Yesterday, they all jumped right around 4%.
We’re still dealing with the coronavirus and the uncertainties it brings as the sickness continues to spread here in the U.S. Today’s updates included California declaring a state of emergency and New York cases doubling.
And the headlines are likely to get worse before they get better as testing becomes more available. But we need to go through this in order to turn the page on this sickness and get back to more normal trading.
The virus hasn’t had a large impact on economic data just yet. That will probably change moving forward. But for now, we received an ISM manufacturing report earlier this week that stayed above 50 (expansion), while yesterday included solid ISM services and ADP (NASDAQ:ADP) employment reports.
And tomorrow is the government employment situation report. Last month was really strong with 225,000 jobs added, which was well above expectations. It's not expected to be quite that high this month.
Another better-than-expected report tomorrow may not help the market much while its focused on the coronavirus, but a bad reading could certainly hurt.
So the market soared higher on Monday, plunged on Tuesday, soared again on Wednesday and dropped today. That means we’re set for a surge tomorrow, right?
If only it were that easy! The big problem is that Fridays have been rough for the market ever since the coronavirus came on the scene. And with the daily headlines now hitting closer to home, it’ll be a challenging session for the market.
Nevertheless, the major indices go into Friday with gains for the week…
Today's Portfolio Highlights:
TAZR Trader: The good news is that this insane volatility will come to an end. The bad news is that Kevin thinks it will last for a few more weeks. We still don’t know if the coronavirus is worse than a normal flu season, but the market isn’t taking any chances as the public takes precautions just in case. Therefore, the editor decided to raise some cash on Thursday with a trio of sells that each brought a double-digit return. He sold half of Alteryx (AYX) for a 57% return in a little over four months, as well as all of ProShares UltraPro QQQ (TQQQ) for a 19.3% gain and half of NVIDIA (NASDAQ:NVDA) for 12.6%.
Surprise Trader: Believe it or not, Dave added an airline on Thursday! Azul (AZUL) is one of the largest airlines in Brazil. The stock has already dipped by 40% due to coronavirus fears. But earnings estimates are still solid, underscored by its Zacks Rank #1 (Strong Buy) status. Regardless of all the nervousness in the air, the editor is paying the most attention to its Earnings ESP of 16.13% for the quarter coming before the bell on Thursday, March 12. It beat by more than 50% last quarter. AZUL was added with a 12.5% allocation. The portfolio also sold Ruth’s Hospitality (RUTH). Read the full write-up for more.
Counterstrike: The crazy market moves continued today, leaving stocks in danger of testing last week’s lows as we move toward another weekend. Jeremy made a bevy of moves on Thursday to deal with this uncertainty, including selling half of eHealth (EHTH) for a gain of 28.6% in just a little over a week. Meanwhile, the editor added a 3% allocation in Direxion Daily Financial Bear 3X Shares (FAZ), which is a bearish financial service ETF that acts as a hedge against financial stocks and the overall market. He also shorted B&G Foods (BGS) and World Wrestling Entertainment (WWE) with 4% allocations and Rogers Corp. (ROG) with a 5% allocation. Finally, Micron (NASDAQ:MU) and Proshares Short VIX Short-Term Futures ETF (SVXY) were sold with the former bringing a gain of 6.6%. Read the complete commentary for a lot more on all of today’s moves.
Income Investor: "It honestly felt like we were on the Raging Bull rollercoaster at Six Flags, being twisted and dragged right, left, up, down, and at lightning speed to boot. In particular, the Dow saw some wild swings, up over 1,000 points on Monday and Wednesday but falling nearly as many points Tuesday and Thursday.
"There were a lot of emotions this week from giddy optimism to increasing fear over the containment of the coronavirus. We’re definitely not out of the woods yet, and we should expect to see more volatility in the markets over the coming weeks.
"Tomorrow’s February jobs report will be an important one to watch. Economists are forecasting 175,000 jobs added and an unemployment rate of 3.6%. Many of us are wondering how the coronavirus is impacting the U.S. job market, but we will likely only get a small glance at the impact; fears about the coronavirus only really ramped up towards the end of the month." -- Maddy Johnson
All the Best,
Jim Giaquinto
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