Stocks Make Big Weekly Rebound Despite Friday Selloff

We had another sharp Friday selloff today, but it didn’t ruin the whole week this time as that epic three-day rally kept each of the major indices solidly in positive territory.

The Dow climbed 12.8% this week, while the S&P rose 10.3% and the NASDAQ soared 9.1%.

These gains don’t completely make up for last week’s horrible performance, but stocks did recover approximately three-fourths of the losses.

This week was all about that three-day winning run from Tuesday through Thursday, which saw the Dow soar by more than 21%!

Hopes for a relief package out of Washington sparked the uptrend, but it didn’t actually become a reality until today. Despite drama from both sides of Congress in recent days, the House passed the $2 Trillion bill and President Trump signed it after the bell.

However, as far as the market was concerned, all of the excitement over this plan was spent in the runup. The passage and signing of the bill was inevitable, so stocks pulled back on Friday after its recent surge.

The Dow dropped 4.06% (or about 915 points) to 21,636.78. The NASDAQ dipped 3.79% (or 295 points) to 7502.38 and the S&P dipped 3.37% to 2541.47.

The indices were looking a lot better just 30 minutes before the close, but a tremendous rush of volatility sent stocks sharply lower just before the bell.

To recap: the Dow plunged by almost 1000 points today and still gained in the double-digits for the whole week! It goes to show just how crazy and extreme this market has been amid the coronavirus outbreak.

So now we’ve gotten help from the Fed and the government. We’re all playing our own parts as well by barricading ourselves at home as much as possible.

Now we need to see some progress with fighting the virus, which is weird to say at this moment since the U.S. recently became the country with the most confirmed cases.

And its likely to get even worse next week as more and more people get tested. That’s why no one wants to bet that we’ve seen the bottom just yet. It’s possible that the market could freak out again as totals continue to grow.

However, we always knew it would get worse before it got better. It looks like we’re getting into the “worse” part now, so let’s hope the “better” part is right around the corner.

Today's Portfolio Highlights:

Blockchain Innovators: Now that so many more people are working from home, there's even more demand for cybersecurity. That’s the reason Dave added SecureWorks (SCWX) on Friday. This Zacks Rank #2 (Buy) provides intelligence-driven information security solutions. It’s part of a space (Computers – IT Services) in the top 28% of the Zacks Industry Rank. SCWX works with several firms that utilize blockchain technology, and it reported an earnings beat just this morning. Read the full write-up for a lot more on this new addition.

Stocks Under $10: The portfolio added Frontline (FRO) on March 16, shortly after Saudi Arabia increased their oil shipments in their spat with Russia. Ever since then, this oil transportation company has been one of the big winners for Brian by jumping approximately 17.4% in the service. And let’s not forget that this includes one of the worst weeks in the history of the market! On Friday, it was also the best performer of the day among all ZU names, advancing 8.3% on a day when the S&P dropped more than 3%.

Value Investor: “It's easy for value investors to panic and think, "I've missed the bottom" and rush in to buy. I believe this is a bear market rally, which means we'll go lower again. I still think that the stock market will recover before the economy does, but there's still no certainty about when that recovery will be. Wall Street likes certainty. There still isn't enough of it.

“And what if that WAS the bottom and I'm wrong?

“We'll be dipping our toes in again soon. I didn't want to buy before this weekend, as Wall Street is just too jittery. Additionally, the White House is expected to decide by Monday or Tuesday, at the latest, whether to extend the 15 days of social distancing or try to end it in some locations in order to revive the economy.

“Let's see what happens. But this weekend, I'm going to be doing some more research on some of the stocks on my wish list to see if we can add a few of those early next week. As I've said, no one can time the bottom. As value investors, our goal is to get good quality companies as cheaply as possible.” – Tracey Ryniec

Have a Great Weekend!
Jim Giaquinto

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