Perhaps you are like me and at some point you just get tired of so much bad news. I woke up on Tuesday morning with just that sense. I didn't want to hear anymore about school closings and restaurants and bars locking their doors. I didn't want to hear about the coronavirus counts rising (I know they still will get much worse). I didn't want to hear about the stock market going down. Or that credit issues are large and growing.
I had reached my limit. I just wanted good news. So I started searching for good news, anywhere I could find it. I even started a hashtag on Twitter: Helenesgreenshoots.
This was one week ago. We have come a long way since then. Folks finally get it.#helenesgreenshoots https://t.co/DkAx3NJR3L
— Helene Meisler (@hmeisler) March 17, 2020
And we saw some good news. We saw the U.S. government finally get its act together and realized the extent of this crisis. We saw new cases in Korea are down. We saw new cases in Italy are leveling off. Dare we even believe that new cases in Italy might actually begin to fall now?
After the close, we even saw FedEx (FDX) say China demand has rebounded more than expected.
My pinned tweet says Price has a way of changing sentiment. Think about it, when the market was at the high, and coronavirus was "over there," no one fretted over their health or the economy. But they should have. We are not immune. I even noted after Apple's (AAPL) pre-announcement in January that folks hadn't even considered that after this was over (and it will eventually be over) perhaps people wouldn't want a new iPhone or might not be able to afford one. No one cared. Why? Because Apple (and the S&P 500) were trading at the highs.
Now that prices have fallen and the economy is shaky, we hear exactly those concerns. But at some point the bad news gets to be too much. At some point there will be incremental good news and we must jump on that, because otherwise we'll send ourselves into a spiral.
Despite the S&P falling to lower lows intraday on Tuesday, the number of stocks making new lows contracted again. Last Thursday we saw 2,377 new lows. Monday we saw 2,002. Tuesday we saw this number down to 1,324.
Nasdaq saw a similar occurrence. Thursday saw 2,097 new lows. Monday saw 1,937 and Tuesday saw 1,106.
This is not to say the rally was superb. It was actually pretty poor statistically. Breadth was the worst for an up day, since this decline began. But the McClellan Summation Index -- which is still heading down since mid-January -- needed a net differential of positive 7,000 advancers minus decliners to stop going down last Thursday. As of Tuesday, it requires positive 3,800. It's still a long way before that gets to zero, but it's a shift.
The various credit exchange-traded funds are still problematic. The SPDR Barclays Capital High Yield Bond fund (JNK) and iShares iBoxx High Yield Corporate Bond fund (HYG) closed in the green, but iShares IBoxx Invest Grade Corp Bond Fund (LQD) continues to plunge.
We have not seen two consecutive up days in the S&P in five weeks. That's a long time. So I'll consider Wednesday a big test for the market. If the S&P can end in the green-still a big if-that would at least change the pattern. And then we could add that to #Helenesgreenshoots.
