Dow Drops 10% As Market Looks For Help From Government

While the market waits for some government action to fight the economic impact of the spreading coronavirus, stocks are apparently going to keep dropping at an alarming and frantic rate.

On Thursday, each of the major indices plunged by more than 9%. They are all now in bear market territory.

A month ago today, the Dow was at an all-time high pretty close to 30,000. Today, after several weeks of losses, it fell an additional 10% to 21,200.62.

That’s 10% in one day and more than 8000 points in one month!

The S&P slumped 9.5% to 2480.64 and the NASDAQ was off 9.43% to 7201.80. These indices have now joined the Dow in a bear market.

For the second time this week, stocks tripped a rare “circuit breaker”. Not long after the open, the S&P dropped 7% and the market closed for 15 minutes. The same thing happened on Monday, so it’s a bit less rare these days.

Stocks came sharply off their lows (though still solidly on negative ground) when the Fed promised $1.5 Trillion in funding to keep credit moving while everything else seemingly shuts down to try and keep the spread of coronavirus at bay.

Unfortunately, the spike didn’t last long and stocks actually finished near their lows of the session.

President Trump took a shot at calming things with a televised statement last night. He banned travel from Europe for 30 days, while talking about some aid for workers who are ill.

But that’s not what the market wanted to hear.

It’s looking for an economic stimulus package with specific details that will instill confidence among investors and help this market get through this coronavirus mania, which has now shuttered things like the NBA season, March Madness and any groups of 500 or more in New York City.

It may sound simplistic, but more than a few people today have said that what this market really needs is some good luck.

Since a vaccine is a far way off and the spreading doesn’t look to have peaked yet, that ray of sunshine will probably have to come from a deal in Congress. And while it’s easy to be cynical, they probably will get something done sooner or later.

Let’s hope its sooner and the market appreciates it enough to break out of this downward spiral.

In the meantime, let’s get ready for another Friday.

Today's Portfolio Highlights:

Commodity Innovators: Regardless of how nervous you may be at a given moment, history tells us that buying during market plunges pays off in the long run. 100% of the time! Therefore, Jeremy is putting some money to work on Thursday with the following three buys:

• United States Gasoline ETF (UGA)
• iShares Global Timber & Forestry ETF (WOOD)
• Aberdeen Standard Physical Palladium Shares ETF (PALL)

Needless to say, each of these names are down double digits of late. Each of them are mid-term ETFs. Read the editor’s complete commentary tonight for more on these moves and on his outlook for the market.

TAZR Trader: The good news is that bargains are everywhere! The bad news is we don’t know how much further this market is going to tumble. However, Kevin dumped several names yesterday and raised a lot of cash, and he put some of it to work on Thursday. The editor added ProShares UltraPro QQQ (TQQQ), Direxion S&P 500 3X Bull (SPXL) and ProShares Short VIX Short-Term Futures ETF (SVXY) as the market is flashing a tempting risk/reward opportunity. He also added to the Invitae (NVTA) position after it made three important acquisitions (YouScript, Genelex and Diploid). Read the full write-up for tons more news on all of today’s action.

Marijuana Innovators: The other side of all this doom and gloom regarding the pullback is that it’s “the buying opportunity of a lifetime!” That’s the way Dave is looking at it right now and this guy has traded EVERYTHING, including the Great Recession, 9/11 and several Tech Wrecks. On Thursday he picked up Altria (NYSE:MO) and Molson Coors (TAP), which are yielding 5.5% and 8.5%, respectively, at these low prices. Simply put, “it will be a long time before we get another chance like this”. Read his full write-up for more.

Healthcare Innovators: Yesterday was a time to clear the decks and reduce risk wherever possible. But today Kevin wants to be better positioned for the next trading bounce, as one extreme will eventually swing to another in an attempt to discount a potential recession. Therefore, the editor added the Direxion Healthcare 3X Bull ETF (CURE) and Align Technology (NASDAQ:ALGN). The portfolio also sold Exact Sciences (EXAS). Read the full write-up for more, including what Kevin expects from here.

Counterstrike: Despite the tone in the media, it’s important to remember the world ISN’T ending. Therefore, an investor like Jeremy is still going to make moves to take profits and limit losses. On Thursday, he sold Dropbox (DBX) for a loss as there’s just no interest in this otherwise solid name right now. However, the short-coverings of World Wrestling Entertainment (WWE) and Rogers Corp. (ROG) brought profits of 27.5% and 29.1%, respectively, which helps “fill in the holes”.

The editor is also keeping hope alive and buying when appropriate during “one of the bloodiest selloffs we have ever seen”. He bought the following names today:

• SPDR S&P 500 ETF (NYSE:SPY) -- 11% allocation
• ProShares UltraPro Dow30 (UDOW) – 4%
• ProShares UltraPro QQQ (TQQQ) – 4%
• Microsoft (NASDAQ:MSFT) – 4%
• CME Group (NASDAQ:CME) – 4%
• Texas Roadhouse (TXRH) – 3%

Read the full write-up for more on these moves and Jeremy’s market analysis.

Have a Good Evening,
Jim Giaquinto

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