For the second week in a row, the indexes traded higher, following news of much worse-than-anticipated unemployment claims. The jump Thursday was about half of what occurred last Thursday, but in both cases, the market was willing to believe that the poor news had already been discounted.
Overall, there is close to 10 million claims filed in the two-week period, which is nearly twice what was expected. In addition, there are signs that there is a large backlog of claims that have not yet been filed or processed.
The market's ability to rally in the face of good news is always a positive, but when volatility is running as high as it is, it is very difficult to separate out what may just be "trading noise" from meaningful technical action. The gain of 2% now is sizable, but in the context of the recent action, it is just trading range action within the levels set by the low on March 23 and the high hit yesterday.
It is likely that some market players are looking ahead to the monthly jobs report Friday. That report will not fully reflect what is going on yet, so there is some hope that the numbers may be better than forecast. The numbers may not be very predictive, but they are likely to generate a response.
While the indexes did manage gains Thursday, I'm growing increasingly concerned that the market has not done an effective job of anticipating the economic damage we will see in the months ahead. The fact that there is such massive stimulus provides some comfort, but there are many problems caused by this crisis that will not be easily solved by throwing money at them. It is extremely important that we stay focused on the price action and looking for guidance there rather than letting our personal desires drive our decisions.
We have some interesting technical levels developing that should help with navigation, but this is going to be a very chaotic market for a while.
Have a good evening. I'll see you tomorrow,