After last week’s market sell-off, the Fed made an unprecedented move this morning. It began what amounts to an “unlimited QE” plan to make sure the markets have plenty of liquidity.
Unfortunately, this was not enough to inspire the markets to a positive close today. Markets sold off when it became evident Congress wasn’t going to pass a fiscal stimulus plan this afternoon.
The good news, however, is that technical factors suggest stocks are bottoming. Many short-term indicators are oversold, volatility appears to have peaked and forced selling by leveraged hedge funds is close to exhaustion.
We expect a sharp, short-covering rally soon. You don’t want to miss those up days in the market. But don’t expect the market to set new highs soon. Just like us, when the market has a heart attack, it’s not going to get up the next day and set records.
Navigating this kind of market requires a well thought-out game plan. We have that in our Three Dials investment philosophy. We will keep you posted as those dials change. For now, try to tune out the media hype, practice social distancing, tip your favorite curbside delivery person well and stay positive.
This, too, shall pass. We will get through this together and be stronger on the other side.
Thank you for your trust.