Home 2020 This Market’s Q-1 Downdraft Created Massive Opportunities for Savvy Investors

This Market’s Q-1 Downdraft Created Massive Opportunities for Savvy Investors



This V-shaped recovery in stocks illustrates how markets strong this market and how fast it recovered from the medical malpractice recession.

For those of us that understood this it set up opportunities for massive gainers over a short frame. It also underlines the need to be nimble, pay attention and tune out the noise.

Below is a chart showing the movement of the S&P 500 Index SPX, +1.20 this year through 5 June:

Note: The S&P 500 rose 1.2% Monday, turning positive for the year on the rotational strength in value and cyclical stocks.

Through last Friday, the benchmark index was down 1% for Y 2020, despite the C-19 coronavirus chaos, the never before shutdown of major sectors of the US economy, + the fear mongering that led the index down 31% for Y 2020 through 23 March when it marked the low and reversed on a dime.

Some of the loud voiced market players underestimated the power of President Trump and his Fed fast moves to enhance liquidity and the power of investors’ demands for reopening of the economy.

Next is a chart of continuous contract prices for WTI Crude Oil this year through 5 June.

WTI Crude Oil is still down 35% YTD, but you can see the continuous contract price went from 61.06 at the end of Y 2019, to as low as 6.50 (intraday) on 21 April, to 39.55 bbl Friday.

Note: WTI Crude Oil futures settled off 1.26 (-3.2%) to 38.24 bbl. On a related note, OPEC+ members agreed to extend the 9.7-M BPD production output cut through 30 July.

The following table includes the 25 stocks among the S&P 500 that were down at least 60% in Q-1. Here we see that all have moved back up smartly in Q-2:

Apache Corp.APA, +10.33%-84%284%-37%-3%
Norwegian Cruise Line Holdings Ltd.NCLH, +19.75%-81%105%-62%38%
Royal Caribbean Cruises Ltd.RCL, +8.18%-76%116%-48%37%
Marathon Oil Corp.MRO, +15.16%-76%122%-46%-5%
Noble Energy Inc.NBL, +12.87%-76%86%-55%32%
Carnival Corp.CCL, +15.80%-74%63%-52%3%
Devon Energy Corp.DVN, +7.94%-73%111%-44%15%
Halliburton Co.HAL, +12.94%-72%112%-41%-8%
Occidental Petroleum Corp.OXY, +17.36%-72%80%-50%-33%
Diamondback Energy Inc.FANG, +14.57%-72%99%-44%0%
Kohl’s Corp.KSS, +8.46%-71%82%-48%-23%
Oneok Inc.OKE, +5.93%-71%108%-40%40%
Alliance Data Systems Corp.ADS, +9.52%-70%79%-46%-25%
TechnipFMC PLCFTI, +5.52%-69%42%-55%9%
ViacomCBS Inc. Class BVIAC, +14.86%-67%77%-41%-4%
Schlumberger NVSLB, +7.54%-66%63%-45%11%
DXC Technology Co.DXC, +8.66%-65%38%-52%-29%
MGM Resorts InternationalMGM, +9.39%-65%84%-35%37%
PVH Corp.PVH, +10.69%-64%67%-40%13%
United Airlines Holdings Inc.UAL, +14.82%-64%34%-52%5%
Simon Property Group Inc.SPG, +7.78%-63%62%-41%-11%
Nordstrom Inc.JWN, +4.15%-63%47%-45%-12%
Marathon Petroleum Corp.MPC, +1.56%-61%76%-31%2%
National Oilwell Varco Inc.NOV, +9.91%-61%53%-40%-3%
Gap Inc.GPS, +10.88%-60%75%-30%-31%

So, $1000 invested in each those 25 at the close on 31 March, the confirmation of the 23 March bottom, your value risen to 46,669 at the close on 5 June.

Note: Had you invested $1000 in each of our 24 Sitting on a Cash Pile 1.0 calls, 23 big winner Vs 1 flat issue, you would have beat that number. Click here for the CP archive.

Adding fuel to the economic recovery underway is the fact that The Conference Board Consumer Confidence Index® held steady in May, following a sharp decline in April.

The Index now stands at 86.6 (1985=100), up from 85.7 in April. This a Key indicator as to the overall direction of the stock market and should continue to climb, given the pent-up demand that is returning to the market after some 3 months shut-down” this according to Bruce WD Barren, Chairman of The EMCO/ Hanover Group and a well respective US economist

And let us not forget the sentiment change to the US Dollar Index, click here for the story.

Monday, the major US stock market indexes finished at: DJIA +461.46 at 27572.44, NAS Comp +110.66 at 9924.77, S&P 500 +38.46 at 3232.26

Volume: Trade on the NYSE came in at 1.4-B/shares exchanged

  • NAS Comp +10.6% YTD
  • S&P 500 +0.1% YTD
  • DJIA -3.4% YTD
  • Russell 2000 -7.9% YTD

HeffX-LTN overall technical outlook for the major US stock market indexes id Very Bullish in here.

Looking Ahead: Investors will receive the NFIB Small Business Optimism Index for May, the JOLTS – Job Openings report for April, and Wholesale Inventories for April Tuesday.

Have a healthy day, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.