March 24, 2020
Biggest Point Up Day Ever
&
Biggest % Up Day Since 1933
Well…
Market Snaps Back with Big Rally
Here’s a positive Market Update. While my policy is to provide updates when the market falls big, today I get to share my thoughts about the biggest point up day in history. The Dow flew 2,113 points higher today. That is nearly a 11.4% jump. Today’s percentage gain was the greatest for a day since 1933. This was a massive move, and a sharp reversal from yesterday’s 582 point loss. Yesterday’s Dow loss exceeded 3%, but was the only major U.S. stock index down that much – – the S&P 500 fell 2.9%. A bit of a sye of relief for me… I didn’t have to send out another down day Market Update. Not that I mind!
Believe me – today’s market move it not normal. Nor were the extraordinary down days we have seen in the last month. So, what happened?? As I noted in Friday’s Market Update, “…. This amount of fiscal stimulus is staggering. It is being called “Liquidity Infinity”. The Federal Reserve is a big part of what happened – and what has been happening. My thoughts have been there are three keys to this bear trap escape for the stock market:
- Even more Fed stimulus
- The passage of the massive fiscal stimulus package that has been held up in Congress since last week, and
- Thirdly, most importantly, a peak in the virus growth rate.
I said there was “good news” in my last Market Update on Friday. More is coming. The explosive upside retrace of the near 40% fall in 30 days requires you be in to benefit. As I said in yesterday’s Investor’s Edge TalkPod podcast, “It’s like have your raffle ticket number called…you must be present to win.”
What next? More volatility. Another 1,000 point fall tomorrow? Would not surprise me. Up 3,000? Would not surprise me. Expect more volatiliy. Of the three things I think the market must get to begin a new, sustainable rally and start the next bull run, we essentially have two. The Fed is simply committed to “doing what ever it takes.” Also, we will get a bi-partisan deal, providing America a fiscal stimulus program never seen before. Investor sentiment turned positive today as lawmakers and the Trump administration neared agreement on a $2 trillion coronavirus stimulus package. The wild card remains with the war on the virus. I believe our remarkable health care specialists and technology will win. How long that takes and when the “curve flattens”, and at what cost of lives is the single source of the most uncertainty and fear.
Here’s today’s scorecard:
Again, as the tables below show, today’s stock market move for the Dow was historical (a redundant statement in the last month).
On the virus outbreak new, confirmed coronavirus cases in the U.S. now stand at 49,594, with 5,840 new cases as of today. That’s up from 43,734 confirmed cases Monday with 10,168 new cases. Today, India’s prime minister ordered the countries population of 1.3 billion to stay home for 21 days. That followed the UK’s prime minister issued a “stay-at-home” order yesterday to fight the pandemic, putting the UK in lockdown.
One of America’s most respected investment managers and Warren Buffet partner Lou Simpson, said,
“In many ways, the stock market is like the weather in that if you don’t like the current conditions all you have to do is wait a while.”
Hope this is helpful.
Thank you for your continued trust and confidence. I remain vigilant as I manage and oversee your investment account.
John