Are You Ready for Some High-Stakes Gambling?

It is a light economic calendar if measured by the number of reports but an important one given the focus on employment. We will get reports from ADP, the “official” BLS employment situation numbers, and the weekly early indicator from jobless claims. Whatever else happens in the economy, jobs take center stage.

Despite the interest in employment, markets are looking beyond the current horrible numbers. Everyone is paying attention to the reopening of the US economy and how things will look in the future. The nature and pace of the reopening has implications for your personal health, societal wellbeing, and financial markets. The question is:

Are you ready for a high-stakes gamble?

The gamble is especially interesting, partly because one’s ability to control personal risk is much lower than it would be in a casino!

Last Week Recap

In my last installment of WTWA, I warned about excessive emphasis on what was working in the current market, asking whether investors should behave like traders. Thanks to those of you who joined in with comments and examples. Especially when the market is making big moves in both directions, it certainly seems like there is opportunity.

This was not a subject picked up in financial media, which benefits from very active trading. As I noted at the start of 2020, I am emphasizing the issues that are most important for investors. I recognize that many of these will not become major themes – at least not right away.

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 the most important information.

As has been the case for several weeks, there are frequent opening gaps. This has been accompanied by much more active trading in the overnight futures markets (WSJ).

Here is an interesting chart from our research team showing what has been working. As I have recently written, this is not a road map for investors unless they want to imitate traders.

The market lost 0.2% on the week. The trading range was 4.7%, a continued reduction from a few weeks ago. You can monitor these along with historical comparisons in my weekly Indicator Snapshot (below).