Markets are up today as the House of Representatives is making its preparation to vote for the coronavirus stimulus bill, the question is what kind of stimulus package it’s going to be?
Today was certainly a day the market needed. The S&P closed nearly 9% higher at 2447. But the real question is, can we get two up days in a row?
Although the anticipation of the bill getting passed powered the market today, several names had questionable moves. High-risk assets like the airlines and the cruise ships all had large positive moves to the upside, while consumer staples, the assets are relatively safe, stayed flat.
History tells us that we are likely to see a continued sell-off into the future. All bear markets have significant up days here and there, and this coronavirus issue seems like it’s even worse than past comparable situations.
People cannot spend their money even if they want to, as they cannot leave their house. Don’t forget, earnings season is coming up next month, and most companies have no idea what their earnings are going to be. However, I can assure you, it’s not going to be good.
Nancy Pelosi suggested a bill that could be passed remotely that would enable legislation to move forward, but there can’t be any objections from the Republican or Democrat members.
In addition, Majority Leader Steny Hoyer suggested there could be up to two more stimulus bills following this one, but what would be included is still up for debate.
This is all happening while the Senate majority leader Chuck Schumer has hinted that the current deal is close to getting passed. As he stated last night, the deal was on the 5-yard line and close to the goal.
This is all good news as it indicates that both sides are agreeing, which is why the market was up today.
As good as this all sounds, don’t go out and start chasing stocks on these big up days, the market is extremely volatile right now, and there is certainly a considerable probability that the market falls even further over the next couple of months.
Be patient, and the opportunities will present themselves. We are definitely salivating over several long-term positions, but we don’t want to jump in anything too soon as there are too many unknown variables at this time. We will be only picking and choosing short-term opportunities where the risk versus reward makes the most sense.