Although the level of unemployment claims that are being filed are at historic levels, the market's immediate reaction to the numbers recently has been benign. There were rallies on the numbers the last couple weeks and there was an initial positive response this morning but this isn't data that can be shrugged off easily. Around 23 million Americans have lost their jobs due to the coronavirus crisis so far and that is likely to grow in the weeks ahead.
The bulls are hopeful that the market has already anticipated this economic disaster and that the Fed will prevent further downside with its $8.5 trillion in stimulus but this is an economic event that none of us has ever seen before and it will not be easy to ignore the profound impact on the lives of millions.
Although there is great fear of the economic issues that lie ahead, there is still a hunger for speculative action in the market. Most of the strong stocks out there are beneficiaries of the coronavirus crisis with Amazon (AMZN) being the most obvious. Work at home plays like Zoom Video (ZM) and Slack (WORK) are doing well, and then there are the medical plays like Abbott (ABT) and Co-Diagnostics (CODX) . Gaming like Sea Ltd (SE) and Bilibili (BILI) are also on the radar. And don't forget gold which continues to trend up strongly.
From a trading standpoint, the individual stock picking is standing out. That may be in part due to Fed-created liquidity looking for a place to flow.
However, the technical picture of the indices is more mixed. There is major outperformance by the Nasdaq 100 (QQQ) due primarily to Amazon and Netflix (NFLX) , while the DJIA and S&P 500 are in danger of rolling over as sectors like financials and energy struggle.
The obvious way to deal with this market is to focus on the small group of individual trades that are working. Overall market direction is murky at best but the buying of select stocks is quite frisky.