Dow Enters Bear Market As Stocks Give Back Gains

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The market gave back all of yesterday’s sharp gains and then some on Wednesday, sending the Dow into bear market territory and continuing a truly remarkable period of intense volatility.

Investors are watching more and more shutdowns around the country as the coronavirus continues to spread, while waiting for some economic stimulus from the government.

Meanwhile, moves of 3% or more have almost become commonplace since the coronavirus took centerstage several weeks ago. There was nothing different today.

The Dow plunged 5.86% (or nearly 1465 points) to 23553.22. That completely offsets yesterday’s 1167-point surge and, therefore, adds onto the more than 2000-point drop on Monday.

It’s no wonder the index is now in bear market territory, or more than 20% off of its recent high. What IS a wonder is the relatively short amount of time it took to make that plunge; the index was at an all-time high just one month ago tomorrow (February 12).

The S&P dropped 4.89% to 2741.38 and the NASDAQ fell 4.7% (or 392.20 points) to 7952.05. These indices are also pretty close to bear market territory.

In addition to the spreading virus, another disappointment for the market today was that we didn’t hear any specifics on economic stimulus to help combat the impact of this sickness.

However, President Trump has been meeting with all types of businesspeople of late and will be addressing the country tonight about the situation, so we’ll see what he has to say and if he can help calm the markets.

Perhaps the least surprising news of the day was the World Health Organization finally calling the coronavirus a pandemic.

Despite not knowing where the bottom is just yet, several of the editors are getting restless and made moves today… and they weren’t all sells! Take a look below…

Today's Portfolio Highlights:

ETF Investor: With the market continuing to swing wildly, Neena decided to add a portfolio hedge on Wednesday. She picked up The Amplify BlackSwan Growth & Treasury Core ETF (SWAN), which invests 90% in US Treasury securities and 10% in S&P 500 LEAP in-the-money call options. The basic idea with this move is to get exposure to the S&P through the LEAPs, but be protected from sharp downturns by the safer US treasuries. Read the complete commentary for more on this move and be ready for the usual weekly write-up tomorrow.

Surprise Trader: With the coronavirus grabbing all the headlines, it’s easy to forget that there are still earnings reports being released. Fortunately, Dave is paying attention. On Wednesday, he added specialty apparel retailer The Children’s Place (PLCE) with a 12.5% allocation. The company has a positive Earnings ESP of 1.16% for the quarter being reported before the bell next Thursday, March 19. Analysts are looking for $1.59, which would represent year-over-year growth of 44.5%. As you’d expect, shares are well off highs of more than $75 from as recently as February 20. Read the full write-up for more.

Home Run Investor: It was only a few weeks ago when La-Z-Boy (LZB) was over $34 after beating earnings in its quarterly report. But this market downturn has shaved approximately 30% off this furniture maker. However, Brian thinks this Zacks Rank #1 (Strong Buy) is in a sweet spot, as low interest rates will spark home buying. And folks who just bought a new home usually end up buying new furniture to go in it. The editor considers this to be a longer-term play and expects to be rewarded once the virus scare is over. Read the full write-up for more.

TAZR Trader: This portfolio has been waiting for the market’s fear to subside, but Goldman Sachs (NYSE:GS) lowering its EPS estimates for this year again has Kevin thinking that the fear may be justified. The firm is now expecting a loss of 5%, while the consensus still expects growth of 3%. In other words, the market is broken, so the editor shed a good deal of the portfolio on Wednesday. He sold half of Square (NYSE:SQ), T-Bond 2X Bear (TBT), and Alteryx (AYX), as well as all of Alphabet (NASDAQ:GOOGL), GW Pharma (GWPH), QQQ 3X Bull (TQQQ), Splunk (SPLK) and The Trade Desk (TTD). Read the full write-up for a lot more on Kevin’s thinking moving forward.

Stocks Under $10: As promised, Brian wants to add some positions to the portfolio, so today he picked up Camtek (CAMT). This Zacks Rank #2 (Buy) designs, develops, manufactures and markets automatic optical inspection systems and related products. The stock was north of $13 just a few weeks ago, so this downturn has put it within this portfolio’s price range. Read the editor’s complete commentary for more on this new addition.

Until Tomorrow,
Jim Giaquinto

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