COVID-19 Opportunity - Laying The Foundation

Posted on by The INO.com Team

An opportunity to begin or reinforce a portfolio foundation amid the COVID-19 pandemic has been presented. COVID-19 was the back swan event that only comes along on the scale of decades. This COVID-19 induced sell-off has been the worst since the Great Depression in terms of breadth and velocity of the sell-off. This health crisis has crushed stocks and decimated entire industries such as airlines, casinos, travel, leisure, and retail with others in the crosshairs. The S&P 500, Nasdaq, and Dow Jones have shed approximately a third of their market capitalization, with the sell-offs coming in at 33%, 29%, and 36%, respectively, through March 20, 2020. Since then, stocks have attempted rallies. However, these have fallen short, and the lows are being retested. Some individual stocks have lost over 80% of their market capitalization. Investors have been presented with a unique opportunity to start buying broad market indices to lay the foundation of a portfolio or to reinforce long positions without single stock risks. Throughout this market sell-off, I have begun to take long positions in the broad market ETFs that mirror the S&P 500 ETF (SPY), Nasdaq (QQQ), and Dow Jones (DIA). It's important to put this black swan into perspective and see through this on a long term basis while viewing this as an opportunity that only comes along in decades.

Most Extreme and Rare Sell-Off Ever

Out of the 12 recessions that have occurred since May of 1937, the average sell-off for the S&P 500 was -31.6% with a range of -57% (2008 Financial Crisis) to -14% (1960-1961). The COVID-19 pandemic has crushed stocks beyond the average recession sell-off of -31.6%. The markets haven't reached the most severe sell-off levels by historical standards, so there's always a possibility for more downside potential. Regardless, at these levels putting cash to work would be prudent for any long-term minded investor. Continue reading "COVID-19 Opportunity - Laying The Foundation" →

Oil Just Posted Its Worst Monthly/Quarterly Loss Ever!

Posted on by Matt Thalman

Over the last month, we have seen the price of Crude oil benchmarks in the U.S. and Brent futures get destroyed. Both benchmarks lost right around two-thirds of their value during the first quarter and roughly 55% of their value during March alone.

The massive price destruction occurred because of many reasons. The first and foremost is the Coronavirus pandemic and how the world is fighting the spread of the virus. Shutting borders to foreign nationals, implementing 'Stay at home Orders,' and recommending 'social distancing' is all leading to a massive reduction in the demand for oil on a worldwide scale. Cruise ships aren't leaving ports, airlines have slashed their number of flights, both public busses and school busses are not operating, and the average person isn't driving their vehicles. We have already begun to see reports from around the world how pollution levels are declining due to these modes of transportation, essentially stopping.

The second reason the price of oil crumbled was because of the "price war' that is currently ragging between Russia and Saudi Arabia. The two countries were the main reasons the Organization of the Petroleum Exporting Countries (OPEC) couldn't agree on production cuts following the softening demand after the Coronavirus began spreading on a massive scale. Russia and OPEC's de facto leader, Saudi Arabia, disagreed on how much each country would reduce production in order to help stabilize the price of oil around the world.

The price war has caused the Saudi's to increase production from 9.7 million barrels a day in February to a targeted more than 12 million barrels a day in April. Thus far, they have held up their threats. As of early April, the first wave of crude was already heading toward Europe, and the U.S. Saudi Arabia hired extra supertankers in March. Those ships are positioned near oil terminals preparing to be filled. Continue reading "Oil Just Posted Its Worst Monthly/Quarterly Loss Ever!" →

Gold Futures Eye Breakout

Posted on by Mike Seery

Gold Futures

Gold futures in the June contract settled last Friday in New York at 1,654 while currently trading at 1,637 an ounce down about $17 for the week still experiencing high volatility daily.

Gold prices remain firm because we have lost about 10 million jobs in the United States of the last two weeks as the unemployment rate has jumped to 4.4%. However, it's pretty much over 10% at the current time as we will wait for next month's monthly unemployment number to confirm that as that should be supportive gold prices as a worldwide slowdown is at hand. Gold prices are trading above their 20 and 100-day moving average as the trend is to the upside. However, the $1,700 level has acted like cement and has not been able to penetrate it on a closing basis, as that is where the true breakout will occur, in my opinion.

The volatility at the current time is exceptionally high. I don't think that situation is going to change anytime soon as all commodity and stock markets are experiencing substantial daily price swings. The Coronavirus has certainly thrown a wrench into the closet as I'm sitting on the sidelines waiting for a better a chart pattern to develop as the risk/reward is not in your favor to take a bearish or bullish position at this time.

TREND: MIXED - HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Silver Futures

Silver futures in the May contract is currently trading at 14.54 an ounce after settling last Friday in New York at 14.53 up slightly for the trading week as prices are right near a 3 week high as prices bottomed out on March 18th at 11.15.

We are keeping a close eye on the U.S economy, which has come to a standstill as the unemployment rate is going Continue reading "Gold Futures Eye Breakout" →

Loss Of Jobs Weighs Heavy On The Market

Posted on by The INO.com Team

As we head into afternoon trading to end the week, the stock market is trading at or near the lows of the day after U.S. jobs fell by 701,000 in March, marking the worst jobs report since 2009, while the unemployment rate jumped to 4.4%. However, the report failed to capture the full extent of the economic blow being dealt with by the coronavirus outbreak. On Thursday, the Labor Department said jobless claims jumped by a record of 6.6 million for the week of March 27.

The DOW has been down over -2.5% on the day, with the S&P 500 losing -2.3% and the NASDAQ losing roughly -2.4%. After a brief mid-week bear market rally last week, the overall long-term downtrend has returned this week with the market posting a losing week, it's third in the previous four weeks.

The DOW will post a weekly loss over two percent at -3.3%, the S&P 500 checks in with a weekly loss of -2.5%, and the NASDAQ brings up the rear with a weekly loss of -2% as well. Continue reading "Loss Of Jobs Weighs Heavy On The Market" →

How To Play This Volatile Market

Posted on by Matt Thalman

Over the past few weeks, I have been on the phone with tons of different market participants. Some are professional investors, people investing a little of their own money, financial advisors who manage a few million and others who manage hundreds of millions, and to first-time investors in their 20's, 30's, and 40's and even one as young as 17 years old.

While everyone wants to talk about what is going on or wants to know what to do or has a strong opinion on what to do within the market, only one thing holds true of every person I have spoken to; no one truly knows what is going to happen next.

Let me emphasize that, "No one truly knows what is going to happen next."

This is true for the people I have been speaking with, investors who managed billions in hedge funds or retirement funds. The Jim Cramer's or other talking heads on CNBC, the President of the United States, nor Congress, nor the Pope himself, knows what is going to happen next.

Although some people may tell you they do or just be very convincing that they do, let me assure you, they don't know what the market is going to do tomorrow, next week, next month, or the rest of the year.

And let's be clear, this would all be true whether or not we're in the midst of a pandemic or not.

However, you can't blame people for making predictions or looking at the past performance of stocks following significant economic turmoil. Comparing the past and trying to find similarities to help us make 'predictions' is very common and can be useful at times, but that doesn't mean we should blindly follow those predictions. (This is even true for my suggestions.)

So, if no one knows what's going to happen, then what should we do? Continue reading "How To Play This Volatile Market" →