Weekly Perspectives: Are You Trading More?

Weekly Market Outlook For April 25 – May 1 – Constructive Consolidation or Investor Complacency?
April 25, 2020
Weekly Market Outlook For May 4-8 – Should I Sell In May and Go Away?
May 2, 2020
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Weekly Perspectives:  Are You Trading More?

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Hi traders,

Here is your weekly newsletter — perspectives on trading and financial markets.

Click here for last week’s edition.

 

Quick Poll – Are You Trading More?

With most of the world now actively social distancing and working from home, the media has reported that more and more people have turned to trading. 

However, I’m curious since the enactment of social distancing are you trading more?

Here’s a quick 1-question poll.

Let me know and I will share the results in next week’s newsletter.

 

What the VIX Index Might Have Looked Like Going Back a Century

Here’s an interesting chart to put the COVID-19 Crash into historical context.

  

Source: BNP Paribas via @RobinWigg  

 

Tech Over Everything

Since bottoming on March 23, 2020, the SPY has rallied close to 30% however not every sector has recovered evenly from those lows.  

To put this into perspective, Bespoke Investment Group offers the following chart comparing the current market capitalizations of the four biggest stocks in the S&P 500 (MSFT, AAPL, AMZN, AND GOOGL) with the four smallest sectors.

At this point, the entire market value of all the energy and materials companies in the S&P 500 is barely any bigger than Microsoft.

All the big four internet stocks are at present bigger, in their own right, than the entire S&P 500 energy sector.
Source:  Bespoke Investment Group

   

Constructive Consolidation or Investor Complacency? 

This week the markets took a breather as the recent rally took a pause with the SPY, QQQ, and IWM all logging in inside weeks.

The end of the trading week saw VXX melt into the close as the inside week on the indices took hold and traders opted out of bidding up the VXX and buying puts into the weekend.

The question is this past week’s price action constructive consolidation or investor complacency?

This coming week promises to be a volatile one as we have a plethora of events on the econ calendar as well as a very busy earnings season to contend with.

If we zoom out and look at the forest through the trees, the monthly and quarterly charts on the North American indices are trading far from their opening levels which puts a larger reversal as a less likely scenario.

With one final trading week left in April, the bias remains long until proven otherwise.

Gold continues to be an asset class to watch carefully as you would be hard-pressed to find a better macro environment for the shiny metal and the technical picture remains very strong.


Now watch this week’s Weekly Outlook video to see the setups and levels we’ll be watching as well as the technical outlook for the VXX SPY QQQ IWM DIA EEM TSX TLT GLD MGC BTCUSD EEM and more for the week of Weekly Market Outlook For – April 25 – May 1, 2020.

 

Quote I’m Pondering

“[T]ruth is only to be had by laying together many varieties of error.”

― Virginia Woolf

 

Understanding Negative Oil Prices

This past week the world got a crash course right now in how the oil markets work.

One of the important things that’s being illuminated to the general public is that there’s no single price of oil, but rather a series of discrete streams and stages of production which can have wild swings due to idiosyncrasies of location and time. 

For the first time in history, the price of oil actually went negative.  

If you’re not familiar with how futures and the futures markets work then here’s a small tongue in cheek analogy that may help.  🤣 Thanks Jayson D. for sharing! 

 

 

 

Stay strong, and happy trading!

Houston

PS – Were you forwarded this email? Subscribe here.

PPS – Don’t forget to join us on our Facebook Group and exchange trading ideas between meet-ups – https://www.facebook.com/groups/montrealtraders/

 

Weekly Perspectives: Are You Trading More?

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