A Pundit’s Paradise – Anyone Can Play

We have a full economic calendar. Only the FOMC decision will get major market attention. Initial jobless claims provide a post-virus look at the job market. Housing data remains interesting.

Despite this, the media focus will remain on the coronavirus crisis. In the absence of any solid economic data, and in the spirit of the new populism, everyone’s opinion is equal. Stating the obvious passes for great wisdom. Any deeper look seems silly.

It is what I call:

A Pundit’s Paradise. Anyone can play.

Last Week Recap

In my last installment of WTWA, I predicted little attention to the economic news. That expectation was certainly accurate! I emphasized the need for investors to decide upon and emphasize the time frame that fit their purposes. I also pooh-poohed [OldProf technical term for “scorned”] the ongoing efforts to “explain” market moves.

More such stories dominated the week. Markets had a knee-jerk and bogus reaction to falling oil prices. The increase in coronavirus cases, even though expected, was treated as some sort of inverse stock futures contract. I confess to some frustration. I have been accurate on the spread of the virus, the analysis of economic effects, and the government policy response. It would be nice to predict how the market would react to expected news. As I say every week, “Good luck with that.”

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring Jill Mislinski’s version, an excellent combination of key variables.

The market lost 8.8% on the week and the trading range was a mammoth 16.3%. Monday reflected a gap lower from Friday’s close of 2972. This reflected the start of the oil price war. The Friday end-of-day rally came with news of policy action from the Administration and the hope for fiscal stimulus. Every day of the week included moves of 1000 points or more in the DJIA. You can monitor volatility, implied volatility, and historical comparisons in my weekly Indicator Snapshot in the Quant Corner below.

For additional context, here are charts showing the decline since mid-February and the total drawdown.

See the full post for even more great charts and analysis.