Is It Time To Buy The Dip??? - Part 42
The World Health Organization currently estimates that 16% of people with COVID-19 are asymptomatic and can transmit the coronavirus, while other data show that 40% of coronavirus transmission is due to carriers not displaying symptoms of the illness.
The US is experiencing about 40,000 new COVID-19 cases a day, but the director of the National Institute of Allergy and Infectious Diseases, Anthony Fauci, said United States may soon record as many as 100,000 new cases of Covid-19.
Yesterday, Federal Reserve Chairman Jerome Powell and Treasury Secretary Steve Mnuchin testified before the House Financial Services Committee. Fed Powell said Federal Powell said he is worried that failure to contain the spread of COVID-19 will set back the US back again…which may mean another lockdown. But Steven Mnuchin, stated he is still expecting a rebound in the second half of the year based on the recent and additional pending stimulus packages
Mr. Mnuchin, who was wearing a mask but removed it while testifying, offered a more optimistic forecast of the economy, saying he expected a rebound in the second half of the year.
After having the fastest bear market in history in March, followed by the quickest 50 day rallied in market history, the DOW had an 18% gain in the three-month period from April throubest quarterly return since 1987. Meanwhile, the S&P 500 saw its best gain since 1998 during the period, while the Nasdaq capped off its best quarter since 2001.
Less than two weeks ago, Smart Money is the most short on the S&P 500 in 9 years.
And the sentiment is just as bad with a sub 10% bearish reading.
However, now they are covering the short positions buying over 200,000 S&P 500 Index E-mini contracts in the week to June 23, the most since 2007.
Yesterday the U.S. Federal Reserve released a list of nearly 800 companies whose investment-grade (as of March 22) debt it plans to buy on the secondary market in order to support financial markets.
The Fed began this program on June 16, and it's set to expire September 30. It has so far bought individual bonds worth almost $429 million from 86 companies. Consumer sector firms (cyclical and non-cyclical) make up a third of the index.
The Wall Street Journal's Nick Timiraos pointed out that the top six companies – Toyota, Volkswagen, Daimler, AT&T, Apple and Verizon – make up 10% of the index. The Fed's bond-buying, which has led to record issuances this year, has also been blamed for causing a disconnect between the economy and the stock market.
The Fed is also buying corporate bond ETFs as part of this $750 billion emergency lending program to buy corporate debt. As of June 16, it has bought $6.8 billion in corporate bond ETFs. Total corporate debt purchased through the Corporate Credit Facilities was $8.7 billion through June 24.
I'm seeing a lot of whipsawing in the futures markets. So whether you are swing trading and/or day trading, be careful. One must have a long bias on the Markets because every pull back has been an opportunity to buy. However, one should also be hedge as well and anticipate at any moment in time, we could see another "black swan" type event before or after the Elections later this year.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advice. Do your own research before making investment decisions.
Posted Using LeoFinance
