Weekly Memorandum 5/18/2020
Equities are up nicely again in the pre-market to start off the week. After finishing down slightly last week, we continue to note the overwhelming bearish sentiment in the market. If anything, this is further fuel for the rally. Remember the quote, "A bull market climbs a wall of worry." There is still plenty to worry about in the real economy, which makes it a great environment for stocks to continue higher in the short-term.
Crude Oil is up nicely again this morning too. Not many are talking about the fact that since trading down to -$40, Crude Oil prices are up over $70! Normally, that'd be a major financial headline, especially since this move happened in just one month.
Precious metals are up nicely too, and so are cryptocurrencies. We could start to see some pressure on interest rates if the rally in Crude Oil continues. A major determining factor will be the direction of the U.S. Dollar, which happens to be flat this morning.
There are some major earnings reports coming out this week, and so it will be interesting to see if the new trend of not issuing guidance by corporations continues. Fortunately for us, we rely largely on technicals instead of fundamentals. We've shown numerous examples in our Mercator Letter how stocks can skyrocket higher even with poor financial results.
The recent environment is a testament to play the hand the market deals you.
Know when to hold em, know when to fold em.