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Market Roars Back on Trillion-Dollar Stimulus Plan

·5 min read

The Dow soared more than 1000 points on Tuesday and got back a little more than a third of yesterday’s 3000-point plunge.

Yep, that’s where we are in this crisis. A major index jumps quadruple digits and makes up less than half of the previous selloff.

The best thing to do is just look forward… fortunately there’s some encouraging things on the horizon.

The White House talked about plans for an unprecedented stimulus package today that would top $1 Trillion and could include payments directly to Americans. It would also include help for small businesses and deferred tax payments.

And the Fed has plans for a special credit facility that would help companies get funding during this outbreak.

So, the market is getting some of what it wants, and the indices responded favorably.

After briefly slipping below 20,000 this morning, the Dow ended higher by 5.2% (or nearly 1049 points) to 21237.38. As if you’d forget, it plunged nearly 3000 points yesterday.

The other two major indices did even better on a percentage basis. The NASDAQ soared 6.23% (or about 430 points) to 7334.78. The S&P improved 6% to 2529.19.

Of course, what the market REALLY wants is some signs that this virus is running out of steam and losing its ability to handcuff world economies. (That’s also what the rest of the world wants.)

We’ve already cancelled events and closed businesses that would’ve brought a significant amount of people together. (And “significant” means anywhere from a few folks to a few thousand.) People are also being asked to work from home if possible and to practice “social distancing”.

Meanwhile, testing should be ramping up and there are encouraging stories of a vaccine.

So let’s keep watch of those daily totals and hope these severe measures start having a positive impact.

The editors were feeling a bit better today as evidenced by their activity. Of course, with such amazing volatility of late, their mood could change drastically from moment to moment just like market.

On Tuesday though, some of them were picking up beaten down companies, which is what you want to see after a selloff.

Today's Portfolio Highlights:

Counterstrike: Want a hopeful sign for this battered market? A cautious and realistic investor like Jeremy added a good amount of risk today! The editor is taking a chance that this market will find support at the 2350-2400 level. Therefore, he made the following buys on Tuesday:

• eHealth (EHTH)
• RH (RH)
• Micron Technology (MU)
• CME Group (CME)
• Virtusa Corp. (VRTU)
• Texas Roadhouse (TXRH)

The first three are added with 5% allocations each and the final three have 4% allocations. Read a lot more about these new additions in the full write up.

ETF Investor: Unfortunately, this volatility is far from over. Therefore, Neena decided to use today’s nice rebound to shore up the portfolio a bit more with another safety trade. The editor sold The SPDR S&P 600 Small Cap Growth ETF (SLYG) because the small caps are getting shellacked, and replacing it with the addition of The Vanguard Intermediate-Term Treasury Index ETF (VGIT). This new addition provides access to intermediate term U.S. government bonds. It’s one of the most popular and cheapest funds for this group, charging just 5 basis points. Read the full write-up for a lot more.

Surprise Trader: Yes, there are still normal things happening in the market during all this craziness… such as earnings reports. For example, Commercial Metals (CMC) goes to the plate before the bell on Thursday, March 19. This steel and metal products company beat by 30% last time and has a positive Earnings ESP of 4.98% for the upcoming report. Dave decided to add CMC on Tuesday with a 12.5% allocation. Read more in the complete commentary.

TAZR Trader: Now that the market has plunged 30% after yesterday’s latest collapse, Kevin wants to be a buyer of “quality growth companies with embedded niches”. Therefore, the editor added to his positions in NVIDIA (NVDA) and Square (SQ) on Tuesday. Read his complete commentary for the specifics on these moves, along with other risk management ideas and potential trades.

Zacks Short List: This portfolio is the place to be during volatile times. Case in point, all four of the positions that were short-covered today brought double-digit returns! Those stocks that left the portfolio today included:

• Spirit Aerosystems (SPR, +44.9%)
• CyberArk Software (CYBR, +26.3%)
• China Lodging Group (HTHT, +17.2%
• Mimecast Ltd. (MIME, +10.6%)

The new buys that filled these open spots were:

• GDS Holdings (GDS)
• Guidewire Software (GWRE)
• IAC/InterActiveCorp (IAC)
• Wynn Resorts (WYNN)

Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.

Stocks Under $10: "There has been a lot of talk about how COVID will impact the economy. Some say recession, some say depression… some say the impact will be muted by all the stimulus.

"The Fed has a QE, now Trump has a QE and who knows what else might come our way. It is clear the government is going to be there for us, so to me I sincerely doubt a depression is coming as a result of this.

"Recession has a higher probability as you only need two quarters of negative GDP to be in recession. The first quarter is going to be hammered with the COVID and 2Q20 might be challenged as well.

"Thing is, if there is a recession, it will be the shortest on record. I hear on my morning briefing on Alexa that the government and a private firm are testing a vaccination in the Seattle area. If that doesn’t tell you what is really up, then I don’t know what will.

"Sure there is going to be a period of testing… and that may take a few weeks, but they are going to come through before we all go the way of the dodo."
-- Brian Bolan

All the Best,
Jim Giaquinto

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