Today’s session has advanced, and there are really no signs of palpable intraday deterioration in either stocks or the debt markets so far.
On one hand, the Fed’s aggressive move made it clear that we have a Powell put now – they won’t hesitate to throw money in clever ways at the economic contraction. Today’s trading action so far shows that the markets are unwilling to fight the Fed, and low volatility attests to that.
On the other hand, the coronavirus situation appears still far from being resolved. The curve isn’t flat yet but the markets are merrily disregarding it for now. Stocks and debt welcome papering the effects over currently.
In light of the above, the currently open short position over the Easter weekend, remains still justified. Had we joined in on the long side, the potential gains till Monday’s NYSE open would be marginal compared to the downside risk faced should the incoming coronavirus news be that bad that they can’t be ignored again.
Facing such a trade-off, it makes sense from the risk-reward perspective to keep the short position open over the weekend.
Happy holiday and thank you.
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care