EB Daily Market Report - April 17, 2020
I wanted to send out an early "special" DMR this morning as we had news last night that a Gilead Sciences (GILD) drug was proven to successfully treat Chicago-area patients with severe COVID-19 symptoms. It was reported that rapid recovery took place in those cases. That's obviously a potential game-changer in the world's fight against this virus. However, an initial report and how the market actually trades after hearing this news could be two totally different animals. Let's also keep in mind the stock market has been on a huge tear higher, so it could be argued that the market was building in good news that was coming. Will we see a "sell on the news" scenario develop today after a very bullish open? With 15 minutes left to the opening bell, the SPY is trading higher by 2.31%.
Yesterday, the action in our two latest ChartLists - the Strong AD ChartList and the Weak AD ChartList - was absolutely mind-blowing. Check out the stats from THIS PAGE. It was probably the most confirming signal yet that what we've done using the accumulation/distribution line is POWERFUL.
The reason I'm sending this message out early today is that, quite honestly, I want to evaluate everything I see today to see if the recent "game" appears to be changing. In other words, is this breakthrough truly a game changer in the stock market's eyes. Forget what you're reading on the internet or hearing at CNBC. Where is the money going? That's the real important question. Lip service means nothing, we want to see the actual change in accumulation/distribution. For example, if this announcement is clearly viewed as the initial stage of putting COVID-19 in our rear view mirror, we should see groups like airlines, hotels, etc. begin to trade higher after the opening bell. Hollow candles should begin to show up much more often in groups like that. Up until now, we've seen a TON of filled candles on these Weak AD ChartList stocks, as opposed to the hollow candles routinely appearing on the Strong AD ChartList stocks.
So here's what I'll be scrutinizing today and the next few days. We're seeing stocks like United Airlines (UAL) up significantly in pre-market, but we also know max pain was looking for strength in these stocks. Meanwhile, a stock like Netflix (NFLX), which has been benefiting from the "stay at home" orders, is down 7+ bucks in pre-market action. This stock is well above max pain, so further selling could be expected.
Is it possible that once again a major event happens just before options expire to reduce the overall premiums to be paid by market makers? Seriously, could the timing of this announcement have been any more suspicious? I will be reviewing both of our new ChartLists to attempt to decipher anything I can from today's after-the-opening-bell trading developments and I'll certainly be discussing whatever I find in tomorrow's WAR Room, which is set to start at 2pm EST. I hope you can join me, but if not, be sure to check out the recording!
Happy trading!
Tom