Will rising Coronavirus cases derail the market?


It’s incredible how much can change in a few days.

Consumer spending rose, Americans returned to work…and then IT happened.

Coronavirus cases shot up in Texas and Florida.  

Reluctantly, governors hit the brakes on reopening, with a couple of states even retrenching.

This week’s jump puts the news in perspective, taking an objective look at the facts and offering several scenarios.

We’ll also take a look at the recent polling and what that means for the markets.

And not to be left behind, I’ll give you some insight into markets often trade into holidays with waning volume.


Economic recovery risk


We knew the possibility existed of a virus resurgence. Many hoped that summer months would tame the spread.

Now, we know that even the best-laid plans rely on our adherence to them, something that’s become a political problem in a few places.

I don’t pick on Texas and Florida for any reason other than they’re the epicenter of the current news cycle as well as states with large populations. Both chose to reopen quicker than many other states.

In Florida, restless youth left their homes to meet with friends, leading to an explosion in new cases, particularly among younger persons.


Florida COVID Dashboard


Similarly, Texas found that the new infections skewed towards the younger demographic.

As it stands, hospitalizations increased, but not as drastically as the data would suggest. New cases haven’t increased the need, suggesting that initial findings that younger individuals could tolerate the disease better.

However, they don’t live in a bubble, with widespread concern they will eventually infect their households.

All of this led to bars closing in both states, though no additional mandates have been implemented yet.

Without a vaccine, the push and pull between opening and pausing economies will continue until herd immunity is reached – if that is a possibility.

Current estimates show Florida’s peak from the recent wave towards the middle to end of July.

With a market priced to perfection, supported mainly by Fed dollars, stock prices will rely entirely on their intervention to bridge the gap. The question is how far and long is the Fed willing to support stocks.

As we get the Fed minutes this week, look for any dissension in the ranks. I expect the longer this drags on, the more vocal hawks become, favoring natural price discovery over an ever-expanding balance sheet.

Let’s not forget that the pandemic ties directly into the upcoming election, which is anything but decided.


Election mayhem


Without question, the upcoming elections will be one of the most controversial in history. Several states already began expanding mail-in voting, while others refuse.

No one knows how the pandemic will affect voter turnout. But if the primaries are any indication, it could be several days before we know the results of local and national elections.

For all you youngins, this isn’t our first rodeo. The 2000’s election took weeks to tie up. Which, while controversial in its own right, still ended with most of us coming together.

This one is shaping up to be a nail biter.

Recent polling shows Joe Biden well ahead of Donald Trump both nationally and in critical swing states.

We know that polling failed us in 2016. However, there are a few points most people gloss over.

First, the national polls were generally correct. They showed Hillary Clinton with a slight edge in the popular vote. That just didn’t translate into the electoral college.

Second, the majority of state-level polls still landed within the margin of error. At the moment, several states show a gap outside of that margin, meaning it would be a statistical aberration based on current polling.

And, as the pandemic and protests continue, the core rallies that solidified Trump’s base come into question.

That’s not to say any of this is a foregone conclusion for either side – far from it. What the data says, combined with the macroeconomic picture, is that President Trump is currently at a disadvantage, both from a weakened economy as well as civil unrest.

There are still several months and a VP pick to go, so anything is possible.

Plus, it appears we won’t see an agreement on additional stimulus. Those benefits start to run out in July, and that could really curtail any economic growth.


So let’s light stuff on fire!


Leading into the July 4th holiday, I expect trading volume to shrink. Like many of us, Wall Street heads out early for the holiday, leaving the juniors and the computers to manage the books.

Lower volume often leads to more volatility and current trends continuing. During bull market runs, we often see stocks float higher.

With recent declines, it’s possible to get some real moves like what led into Christmas 2018.

Right now, I’m preparing a plan for my Bullseye Trade of the week. Laying out my best trading idea, I see a couple of places that look ripe to make an explosive move.

So what is Bullseye Trades?

Click here to find out more.

Stocks I want to bet against this week…


Stocks I want to buy this week…



This Week’s Calendar


Monday, June 29th

  • 10:00 AM EST – Pending Home Sales May
  • 10:00 AM EST – Dallas Fed Manufacturing June
  • Major earnings: Herman Miller (MLHR), Micron Technologies (MU)

Tuesday, June 30th

  • 7:45 AM EST – ICSC Weekly Retail Sales
  • 9:00 AM EST – S&P CoreLogic Case Shiller April
  • 9:45 AM EST – Chicago PMI June
  • 10:00 AM EST – Consumer Confidence June
  • 4:30 PM EST – API Weekly Inventory Data
  • Major earnings: Conagra Brands Inc (CAG), FedEx Corp (FDX), Pebblebrook Hotel Trust (PEB), Steelcase Inc’A’ (SCS)

Wednesday, July 1st

  • 7:00 AM EST – MBA Mortgage Applications Data
  • 9:45 AM EST – Markit US Manufacturing PMI June
  • 10:00 AM EST – Construction Spending May
  • 10:00 AM EST – ISM Manufacturing June
  • 10:30 AM EST – Weekly DOE Inventory Data
  • 2:00 PM EST – FOMC Minutes
  • Major earnings: Genl Mills (GIS), Macy’s, Inc. (M)

Thursday, July 2nd

  • 8:30 AM EST – Weekly Jobless & Continuing Claims
  • 8:30 AM EST – Unemployment & Jobs Number June
  • 10:00 AM EST – Factory Orders & Durable Goods May
  • 10:30 AM EST – EIA Natural Gas Inventory Data
  • 11:00 AM EST – Kansas City Fed Manufacturing Activity for June
  • Major earnings: None of note

Friday, July 3rd

  • Markets closed for Independence Day


Latest News

TSLA and NFLX forced my hand

  Prior to this week, I focused my trades on momentum and large tech companies. Now, I’m scaling back on my position size and looking at stocks less correlated to the market. In other words, I’m lasering in on stocks that are outperforming the overall market,...

Is ZM setting up for an epic crash or another bull run?

Hello trader, If you bought $10,000 of ZM at the open of their IPO, you would have over $70,000 today. With an epic run of over 730%, it’s natural to ask… Are shares of Zoom Media setting up for an enormous crash? Most definitely. But that doesn’t mean I want to bet...

Which would you rather: AMZN or APPL?

A difficult choice to say the least. Amazon’s diversified revenue streams cushion it from downturns. Yet, Apple’s products and services garner incredible market share with a global presence.   Between the two, I like Apple more, and here’s why. Apple could see an...

FB and GOOGL look good, but these 3 stocks could be monsters

  I’m calling a bull run into the election. But Facebook and Google aren’t my favorites. I’m looking at Tesla, Carvana, and TAN, the Invesco Solar ETF. And I want to walk you through these juicy setups. Each of these contains catalysts that could propel stocks...

Free stock trading costs you more than you think

Brokers that tell you stocks are free to trade aren’t telling you the whole story. I’m here to set the record straight and uncover the truth. Because there are hidden costs to this so-called ‘commission-free’ stock trading. You see, these Gordon Gecko types aren’t...