Good evening everybody. Just in case you’ve lost track amid this corona stupor, today is Friday! As such, and if you’ve not yet done so, we recommend procuring a drink before settling down to read this high quality summary of today’s rodeo.
Stocks closed higher. The S&P 500 rose 2.68% and finished the week up 3.04%. This was the second consecutive up week for the index, the first time that’s happened since Feb 9.
Netflix and Amazon paused today and finally gave it up, closing down 3.69% and 1.38% respectively. The leaders lagged. The laggards led. It was Freaky Friday!
Still, they’re up huge YTD (30.72% and 28.45%) and leading the way in a narrowing momo hoedown.
We’ve been harping on energy weakness and oil especially and focusing on that $20/barrel level it has bounced off a few times recently. Welp, today we broke with a vengeance with crude closing down 8% to $18.27. The low was $17.31. Holy Shirt! (The November 2001 intraday low btw was $17.12 – now in play.)
Here’s the weekly Heat Map from the kids at Finviz. Big cap tech is rocking.
Hey – BIG Shoutout to these Stocktwits members who have been with us for over 10 years. What a great group! Their longevity is a testament to their passion and skill. Check ‘em out and give ‘em a follow!
Shopify was up 41% this week and closed at an all time high. It now has a $69B market cap. It appears people are doing business online. Check out that weekly candle. Like whoa. 🤯
Luckin Coffee. Halted. 9 Days. LOL.
Paycheck Protection Program Update
If you are a small business owner in need of assistance here’s a great resource from Zachary Warmbrodt.
Some banks are continuing to take Paycheck Protection Program applications while funding is lapsed. Others are not. Here’s a thread on where things stand at various lenders.
The Munger Interview
Jason Zweig interviewed Berkshire Hathaway’s Charles Munger a few weeks before the annual meeting in Omaha (this year it will be a virtual affair). Here’s the money passage:
Nobody in America’s ever seen anything else like this,” said Mr. Munger. “This thing is different. Everybody talks as if they know what’s going to happen, and nobody knows what’s going to happen.
Read the full post on WSJ.
Stocktwits Sentiment Divergence
Here’s the updated Stocktwits Social Sentiment Index for April 20, 2020. Despite this week’s rally in price and one month weekly closing high, sentiment was unable to clear its April 11 level. This is a divergence, price increased while sentiment decreased. It is also worth noting that bullish sentiment on Stocktwits is still well below 50%.
Place your bets…
BofA put out the chart below. It shows the 5 largest stocks in the S&P 500 over time and the percentage those stocks make up of the entire index.
Today, the 5 largest stocks in the S&P 500 make up a greater percentage than ever before and it ain’t even close.
Microsoft, Apple, Amazon, Alphabet, and Facebook comprise over 21% of the S&Ps.
As traders are piling into the fewer and fewer stocks that are working, these names have a greater influence on the broader index.
It’s a top heavy market, a factor and product of momentum and narrowing breadth. Notice the last time this chart got out of hand coincided with the tail end of the internet bubble…
Is This The New Normal?
In a Facebook post, Mark Zuckerberg announced internal, in-person events of 50+ people will be canceled through the first half of 2021. The “vast majority” of $FB employees will continue to WFH through April. Is this the new normal?
Quick Book Reco Here: The Rule by Larry Hite
We just finished rereading The Rule by market Wizard Larry Hite. This is a great book with some attitude.
Risk management is so critical – the first rule of taking risk is managing risk. No strategy is useful if it does not define risk. No exceptions. Hite prioritizes risk management above all else, so it’s an entertaining reminder, as he also details his colorful life in NYC. He’s preaching the gospel.
If you’re new to trading or have been around the block a time or two, check it out, it won’t disappoint.
Links that Don’t Suck
This Man Lives Alone on a Dreamy Ranch with Redwoods
Netflix Documentaries FREE on Youtube
What Could Cause Another Leg Down in the Stock Market?
Leading Traders Share Reflections on Trading Coronavirus Crisis