If You Can Manage the Risk, the Coronavirus Has Presented Opportunity in this Market

If You Can Manage the Risk, the Coronavirus Has Presented Opportunity in this Market

$DIA $SPY $QQQ $RUTX $VXX

Economist Mohamed El-Erian sees opportunities for investors who can manage risk during this coronavirus induced stock market dive.

“Those people who entered this defensively and have a massive appetite for volatility, there is starting to be real pockets of value,” Mr. El-Erian told reporters.  

For most investors, I think you still want to be cautious out there,” he said.

Mr. El-Erian said the companies risk-tolerant investors should be looking at are those whose businesses will benefit in the “post-crisis world.”

As long as those companies have strong balance sheets, the economic shock from the coronavirus should not be crippling. In fact, those companies will “come back really strong,”

That’s why I’m saying there is areas of long-term value, even now, before we turn around. But you have to have a tremendous ability to withstand volatility,” he said.

However, Wall Street slipped Monday as the rapidly spreading coronavirus forced more US states into lockdown, eclipsing optimism from an unprecedented round of policy easing by the Fed.

After cutting interest rates to near Zero and offering to purchase more Treasury bonds and mortgage-backed securities last week, the Fed decided to lend against student loans and credit card loans as well as buy bonds of larger employers, Reuters said.

The unprecedented moves lifted the US stock index futures more than 3%, but the mounting death toll from COVID-19 and growing evidence of the economic damage to corporate America drove the main indexes back into the Red.

Monday, the major US stock market indexes finished at: DJIA -582.05 at 18591.99, NAS Comp -18.84 at 6860.03, S&P 500 -67.52 at 2237.40

Volume on the NYSE came in at 1.6-B/shares exchanged

  • NAS Comp: -23.5%
  • S&P 500: -30.8%
  • DJIA: -34.9%
  • Russell 2000: -39.9%

HeffX-LTN overall technical outlook for the major US stock market indexes is Bearish in here.

Looking Ahead: Investors will receive New Home Sales for February Tuesday.

Have a healthy day, stay at home!

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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