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Irrational market exuberance rises, falters on Wall Street Thursday.

Written By | Apr 9, 2020
irrational market exuberance

Image by Alexandra_Koch from Pixabay. Public domain, CC license 0.0.

WASHINGTON – Save for a brief, late day reversal earlier in this Good Friday shortened trading week, all three major averages have continued to explode to the upside. The rally continues Thursday despite the twisted avalanche of pro-China, anti-Trump coronavirus cheerleading relentlessly led by the major media-Democrat-hard left combine. As we approached 2 p.m. ET Thursday, we gape in amazement to see stocks soar yet again. But just an hour later, Stocks rallied hard once again Thursday. But oil price uncertainties began to reverse Wall Street’s seemingly irrational market exuberance late in the day.

The Dow Jones Industrials hovered between +475 and +525, a plus 2% gain at 2 p.m. ET before markets began to falte. The broader-based S&P 500 and the tech-heavy NASDAQ showed similar gains, but later took a hit.


Also Read: Wall Street to observe annual Good Friday trading break

So what made Mr Market so much happier this week than he was over the last few gut-wrenching, loss-laden weeks? Let us count the ways.

Irrational market exuberance in the time of Plague. Why? Progress on oil?
  • President Trump seems to have made at least some progress helping the Saudis and the Russians see the error of their oil-price slaughtering ways. Today is the day that talks on that nasty price war between these two oil behemoths – which might also end up involving US shale producers – were / are supposed to begin. Oil prices and market averages took a brief, nasty hit even as we began this paragraph, as some production cut news is apparently imminent. “Unexpected” bad news on this front could easily terminate today’s irrational exuberance. Pronto.

UPDATE: Crude oil prices, up Thursday morning in anticipation of good news, have now reversed course somewhat. Crude is currently off by nearly 1%, and the move is taking a chunk out of oil and refinery stocks and is beginning to deflate the morning’s irrational exuberance. Notes CNBC:




“Oil prices turned negative, giving back a more than 12% gain, as the Street awaited details on production cuts from OPEC and its allies, known as OPEC+.

“Producers were reportedly amenable to scaling back production in an effort to prop up falling oil prices, although traders were skeptical that an agreement on a cut large enough to combat declining demand would be reached.”

Bernie’s out of the picture for Election 2020. But the Democrats are damaged.
  • Wednesday’s irrational market exuberance, at least according to the media, occurred when Bernie Sanders decided to drop outof the Democrats’ presidential sweepstakes. Bowing to reality, he announced he had “suspended” his campaign, as Washingtonspeak technicality that, in general, allows a failing candidate to shore up personal and campaign fund losses, which are often in the stratosphere when it comes to major election year politics. This simple act gave a big boost to flagging bank and financial company stocks. These “financials” greatly feared what a die-hard, unrepentant Communist candidate might do if he actually won the White House this fall. But, while they may not have to worry about this now, they and the media continue to ignore the fact that Bernie’s candidacy has helped pull the Democrats’ radical platform so far left that you can actually see the glimmerings of Stalinism in their eyes.
The continuing Plague Year madness of the MSM
  • Despite the media’s relentlessly asinine coverage of the President’s daily coronavirus updates, most Americans seem reasonably satisfied with the Federal government’s aggressive response to the current pandemic. That’s while you’ll find this writer’s correct opinion to the contrary in the minority of media reports. Fact is, the administration is already working on plans to systematically and logically get American businesses and American schools back to doing what they normally do in such a way as to continue the nation’s guard against a possible second wave of coronavirus infections. While at the same time, these plans are intended to split the medical and fiscal difference in order to get the economy rolling again before it’s impossible to save it from a serious recession. The very fact, however, that the Administration is already hard at work with plans to re-open America also continues to encourage the market.
And the Madness of Queen Nancy
  • Making matters worse in the coronavirus arena, certifiably crazed House Speaker Nancy Pelosi is already wasting precious Congressional time. She’s using the coronavirus invasion as a pretext – wait for it – another impeachment investigation. Pelosi and the Democrats are acting like spoiled school children. The kind that need a sound spanking before being sent up to bet without supper. Nonsense like endless fake impeachment is what they spend their time. They should try to help an American electorate that, in 2018, voted them in to address the needs of average Americans. NOT the 2020 campaigns of all those Democrats who lied to them in 2018. Currently, another potential bill to help Americans was out there briefly in the Senate before failing to gain traction. Nancy called this a GOP “stunt.” But Nancy’s entire speakership has been one extended “stunt.”
Oh, and about that coronavirus pandemic…
  • As for the Wuhan coronavirus, the Chinese flu, the Kung flu, COVID-19, just plain coronavirus, or whatever else readers prefer to call it?  There are at least some signs on the horizon that the wave of infections has already begun to peak. That’s true at least in most of the nation’s hot spots. These include NYC, Washington State, urban California, New Orleans and environs and Detroit. It’s still too early to tell. But optimism is always welcome, even if it’s guarded. Including optimism from the media’s favorite pro-Hillary government official.

“Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told Fox News on Wednesday that the U.S. death count related to the coronavirus is now lower than initially thought, noting there should be a turnaround after this week. He added, however, virus efforts should be intensified. “

For investors, Jim Paulson voiced a more fiscally informed opinion.

“‘If the curve is bending, for the first time, some time-line is coming into focus for restarting at least parts of the economy,’ said Jim Paulsen, chief investment strategist at the Leuthold Group. ‘This means investors can start to reduce their best guesses as to how long this recession will last and even if the recession is very deep.”

Might Thursday’s gains fizzle?

At approximately 2:30 p.m. ET, averages seem content to slowly give back their gains. Very slowly, as if Thursday’s burst of irrational market exuberance had suddenly encountered a slow leak. As we finish this article, the Dow is just up 300+ points now as the other major averages follow suit. The oil resolution (or relative lack thereof) has dampened today’s enthusiasm somewhat.

Bonds stopped trading early at 2 p.m. today. And both stocks and bonds will take Good Friday off. So traders and investors might have decided to wrap things up early this afternoon. Just like they do over national holiday weekends. At this moment, volume appears to be slowing, so likely we’ll experience some last minute selling.

UPDATE: After the 4 p.m. bell. All three averages closed up Thursday by an average of 1.2% for the Dow and the S&P 500 and a less impressive 0.75% on the NASDAQ, possibly due to profit taking.

Easter traditionally puts believing Christians in a Resurrection mood. But this year, skeptical investors, badly beaten by the coronavirus invasion, will move to protect smaller resurrections in their portfolios. They’ll likely sell anything they don’t think they can trust over the long weekend. They don’t want to awaken to a new disaster Monday morning. As always, better safe than sorry.

We continue to hold our slowly reconstructing portfolios. But we’re still buying desirable shares by ones and twos when they’re down. But that said, we’re generally only buying on negative days to get the best price.

Cruising along the bottom?

I think we’re cruising along a firm market bottom right now. But, like most investors, my 6th sense is not always infallible. So tiny buys and occasional sells in the current zero commission era makes sense. That way, if you’re making a mistake, it’s not a very big one. Plus your portfolio won’t experience another epic bloodbath like the one most of us just endured in March.



Myself? I’d prefer another week of irrational market exuberance.

Meanwhile, a happy and blessed Easter and Passover weekend to all. We’ll be back here over the weekend as time and events permit and / or justify. But for sure, we’ll be here watching what happens the Monday after Easter when the Wall Street action resumes.

– Headline image: Image by Alexandra_Koch from Pixabay. Public domain, CC license 0.0.

 

Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17