May 10, 2020

Weekly Market Outlook

By Keith Schneider

Equity markets shrugged off Mr.Buffet's recent dumping of his airlines stocks (mentioned at his annual shareholder's meeting last Saturday) and reversed what looked like a serious selloff int the making.

Oil and energy bounced off very depressed prices ignoring the weakness in the airlines and markets stayed focused on a gradual reopening of the economy.

Small Caps continued their recent strength on good volume.

So did lumber, which could be an early inflationary indicator.

Despite the airline industry’s weakness as measured by the ETF JETS….

One company performed well and that was SPCE, which is Virgin Galactic.

If you are not familiar with Richard Branson's latest brainchild, it is all about space travel.

The conclusion from this is that getting off the planet is a good investment, staying grounded on planet earth…. not so much.


This week's highlights are:

  • Risk Gauges are 100% bullish as all key indexes regained their 10 DMA's
  • Grandpa Russell (IWM) closed +5.8% for the week on great volume
  • Risk-off sectors such as Utilities (XLU) and Consumer Staples (XLP) underperformed yet again
  • Consumer Discretionary, a risk-on sector performed well
  • The Energy sector rallied supported by the lockdown being lifted, and even Solar stocks (TAN) showed some interest
  • Gold and Bonds, both Risk-off plays took a breather, digesting large gains this year
  • VXX (Volatility) has fallen back to more reasonable levels, a bullish development if it can stay at current levels or drop further
  • Soft Commodities (DBA) continue its bottoming process

Stay Safe and Best Wishes for your trading

Keith Schneider


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