So many of you have been watching your portfolios vaporize into the mist and then rematerialize and give you hope in this coronavirus market. If you are one of these people, wonderful on you for having diamond hands through the whipsawing. If you have bowed out, cashed in your chips and are sitting idly by while you watch this rollercoaster from hell, you might be seeing some of your favorite stocks coming on down to massive discount levels.
Apple for $250, Google for $1,000 and Microsoft for $130, to name a few. While there may be future downside ahead, we need to look at some technical indicators to see how the swings are developing. As of Wednesday, that positive cross in the MACD that I referenced last time happened. This is where I personally got long. Now, if this reverses back to the downside, I will go completely to cash again, but until that happens, I am going to ride the upward momentum.
Along with some large Nasdaq allocations, I am still hedging all positions with $TLT. It is important to always have a hedge, and I would not go into any long positions in this current market without a hedge added in the case of another downturn. I personally am of the opinion of 80-20 long to short.
Now, we may retest the lows, I am not sure, and we will not know until we know. I know that is not always reassuring. This isn’t in anyone’s comfort zone at this point.
My opinion is that we need to treat this like a natural disaster. There are going to be some small businesses that cease to be. GameStop has already shuttered more than 200 locations permanently. Roughly 2% of restaurants will not make it through the shutdown. That is an inevitable fact. However, with a 2 Trillion dollar injection into the economy, interest rates near zero, and other parts of the world seeing a slowdown in number of cases reported and deaths, we may be back to record highs by the end of the summer.
This is all speculation, of course, but it is impossible to ignore how large a stimulus is going to be signed into place within the week.
Keep an eye on the data. Don’t trade fearfully or with any type of FOMO. Watch the data. Period. This is coronavirus market trading.