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Too Many Uncertainties for a Sustained Rally

5 comments

Even the optimists are starting to understand that rallies are to be disbelieved and sold, not cheered. It’s one thing for the stock market to shrug off tariff wars, geopolitical tensions and impeachment hearings. But the pandemic poses a threat potentially even more grave, and there are simply too many uncertainties at the moment about how it will play out for stocks to stage a sustained rally.  Will the U.S. escape a major outbreak, or will we instead live under economically crippling rules of quarantine like Italy? Still worse would be to have protocols similar to China’s imposed across the length and breadth of North America. It appears that China’s stringent containment measures are working and that the spread of coronavirus there is finally slowing down. If America is forced to take similar steps, we could be in for a long hot summer: no dining out, no concerts or ballgames, maybe even no backyard barbecues with neighbors. All of that seems a stretch at the moment, but no one can rule it out, least of all investors who are understandably eager for America to get back to business as usual.

Please do not ask trading questions!

  • John Jay March 13, 2020, 7:33 am

    That broker just sent a message they expect to increase margins another 50%, and that you should expect a long wait time if you call in with a problem, and your best bet is to increase cash reserves to avoid being sold out of a position!
    And that there are “No exceptions”
    They said a cash “Buffer” is a very good idea.
    NQ margins have gone from $4687 before this all started to $23,116 this morning!
    With Intraday Maintenance at $18,493!

  • John Jay March 12, 2020, 10:30 pm

    One of my discount brokers has doubled and tripled margins on futures contracts since the big sell off started.
    If you were on the wrong side of these massive moves, I imagine a lot of little guys didn’t have the cash to add to their accounts and were quickly sold out which just added fuel to the plunge.
    Not to mention any Whales caught in a similar position.

  • Ben March 12, 2020, 1:59 am

    One more thing: I’ve been tuning in to YouTuber Peak Prosperity for a lot of C-19 news and analysis. He posted a video last night that I think everyone needs to see…

    https://www.youtube.com/watch?v=t4N09qsMdPQ

    The important part begins at 06:07 and ends at about 15:15, but the whole video is worth watching and heeding. Bottom line: Italy’s hospitals are past capacity and is NOT just with old people with underlying health problems.

  • Ben March 12, 2020, 1:06 am

    Prison riots and tanks on the streets of Italy; national guard in New Rochelle, NY; cases all over Africa, Latin America, and the Caribbean islands; several Congressmen under self-“quarantine” (though some are d-heads and aren’t even doing that much); many Iranian MPs and officials sick; NBA cancels remaining season; UK’s health minister sick; NYC port authority head sick; Italian and UK YouTubers that I regularly watch are sick; even my grand-niece is sick — fever and cough — though she was tested and, it turns out, she has type B flu…

    And today, for the first time, I went out _early, early, early_ morning grocery shopping — masked up, sealed goggles, nitrile gloves. My folks have cancelled their doctor appointments this week and next, while my brother has been working from home.

    But one thing driving me up the wall are these people acting like, “OH, CRAP! DID ANYONE REMEMBER TOILET PAPER?! WE NEED A WAREHOUSE OF TOILET PAPER!”.

    It’s something you can easily substitute, in many ways, but it’s become this “must-have” item, like gold!

    &&&&

    I was in a Walmart yesterday near Ft. Lauderdale and a 50-foot-long rack of toilet paper — on TWO rows of shelves — had been cleaned out. Ditto for facial tissues. No cases reported yet in Florida that I am aware of.
    RA

    • Ben March 13, 2020, 12:31 am

      Not sure about Ft. Lauderdale, but Florida has 27 active cases, according to the Johns Hopkins. Until very recently, they dotted their map according to exact locations in the U.S., but now just assign a dot for each state. I guess they don’t want us knowing where to avoid or be especially cautious. Anyway, despite the 27 active cases… nope, still not a good reason for a toilet paper run!