Hold Your Horses… 3:50pm on Friday: the initial imbalances for close are posted, providing the extra boost to push the SPX back above its 50-day avg in an orderly +2.7% up-day led by Value sectors. Sounds like the perfect platform for the stocks to continue their rebound, right? Unfortunately not, as markets open the week by once again digesting a harsh dose of reality. Front-month WTI crude futures nearing complete collapse will certainly suck the air out of the room, but all things considered the damage is not too bad. Luckily headlines on the virus front continue to shows signs of easing as well, with the growth of cases decelerating in New York, Italy, and France (amongst others).

Glass Half Full of FOMO… In such uncertain times nearly every set of headlines is up to interpretation, and today is no different. Caveats are required as President Trump unveiled the bones of a plan to re-open the US economy (but left a lot of questions left unanswered) and health officials released some positive treatment results from Gilead’s remdesivir (which the co itself cautioned is anecdotal), but investors are choosing to look on the bright side (as they have more often than not as of late). Unlike much of the week however, Tech and Healthcare are taking a back seat to Value sectors like Energy, Banks, and Autos as optimism and certainly a healthy serving of FOMO take hold on a Friday. 

Reality Check…. If last week felt like the market was cherry-picking the good in headlines, today’s sell-off is a logical response to an inevitable dose of reality. Optimistic attitudes allowed the S&P to quickly retrace half of its losses, but that’s only created an opportunity to pause and more carefully assess the underlying damage done to the economy (and earnings), and the picture isn’t looking quite so rosy. Perhaps it’s just a temporary pullback, but unnerving signs like DXY pushing back toward 100 and small caps sitting out from the recent rebound (RTY -29% ytd) leave the unfortunate impression that the damage done beneath the surface hasn’t fully come to light

Easter Rising… Ahead of the long holiday weekend US indices are continuing their attempt at a resurrection. Hope springs eternal (for the moment…) as signs of flattening curves in virus hotspots and proactive planning around how / when countries can reopen their economies have allowed markets to overcome their usual end of week jitters. Still there’s more than a few bunny hops to go before all the damage is undone, with more than 80% of S&P names yet to reclaim their 200-day moving average. Not to mention the week’s gains have largely been carried on the back of some of the easier wins: beaten-down sectors Autos, Banks, and Retail continue to outperform today

“Won’t Back Down”… The headlines aren’t perfect, but it seems investors exhausted by selling and fed-up with bad news are ready to stand their ground. The excuses were there for US indices to have a down-day (yesterday’s +7% surge, for one) but as we enter the last 2 hours of trading the S&P is hanging tough. Recent reports that virus cases in Italy continue to drop off and that China’s Wuhan travel ban is to be lifted provided fresh bursts of hope even as New York confirmed its deadliest day yet. Good news is good news, but with so much uncertainty remaining around a subsequent economic recovery (not to mention a painful earnings season fast approaching), this mini-bull run may be “Runnin’ Down a Dream” a bit too early…

Back in the Green… It’s been a rocky ride but US indices are posting a positive response to yesterday’s disappointing Q2 kickoff. Oil is the star of the show (more on that later), carrying risk assets and the S&P higher after a muted morning performance. A green day feels good, but the momentum is fading into the afternoon, and putting things in perspective the index’s earlier highs were capped by the trading range established yesterday. Unfortunately it feels more likely the S&P will be testing support at 2400 / 2346 before trying to re-capture resistance at 2650.

Thickening Skin… With Trump giving up on his vision of an Easter resurrection for the American economy and scary scenes beginning to unfold in NYC hospitals over the weekend, US futures had every right to flash red overnight. The fact that US indices have fought their way back and are now holding onto gains shows investors may have built up some callouses to scary virus headlines and once unthinkable economic datapoints (see the S&P barely flinching at a -70 print on Dallas Fed manufacturing). Still the worst is yet to come on both of those fronts, and plenty of chatter around a W-shaped recovery leaves the impression many are expecting a reversal of fortune once the quarter-end pension rebalancing mojo officially peters out

Don’t Jinx It… These volatile times have given new meaning to a certain saying involving counting chickens, but at the moment the S&P is on track to post its first back-to-back gains since Feb 11-12. US indices appear to have found their mojo again after it appeared earlier that yesterday’s rally had exhausted all the stimulus bill enthusiasm, and the S&P is now ticking just above last week’s highs. Still, the worst is clearly yet to come in terms of virus cases in the US, with NYC expecting to reach its peak in 2-3 weeks and hospitals there already testing capacity. Add in unemployment data coming tomorrow, and it will be interesting to see just how long the current optimism holds up

Monday Gridlock… Leave it to Congress to find a way to not rise to the occasion. The Senate’s failure to keep reach an agreement over the weekend on a fiscals stimulus package appeared to derail any hopes of starting the week on a positive note (despite the Fed’s best efforts). Now word coming out moments ago the two sides have again failed to strike a deal have US indices heading lower once more after attempting to rally. US virus cases continue to grow rapidly (with NYC as the epicenter), but even as more states prepare to issue stay-at-home directives, President Trump is reported to be having reconsidering the federal govt’s guidance on social distancing. The Dow earlier erasing all of its gains since the 2016 election night surely has something to do with the case of cold feet…..

One Step Forward, One Step… It’s been over a month since the S&P has managed to post back-to-back positive sessions, and after another long week a double dose of green would be a nice way to head into the weekend. Things were looking promising this morning after S&P expiry went relatively smoothly and the VIX finally showed signs of easing, but right on cue more virus headlines have darkened the mood. Word that pubs in London will close and that 100% of the non-essential NYC workforce must stay home erased those gains, and a Trump press conference announcing new border policies further dented US indices, which are just now attempting to climb off the day’s lows