April’s in the books, and though it was a down day for stocks, the market had its best month in decades.
The Dow fell 1.2% while the S&P stumbled for a 0.9% daily loss. The Nasdaq Composite fared better, falling only 0.3%.
It was a somewhat expected reaction after the indexes rallied on Wednesday. With equities only 16% off their all-time highs, many analysts are convinced that bulls have outpaced an economic re-opening. If the U.S. opens back up for business, economists project that it could be years before a full recovery.
“There’s a gap between what markets are doing and what we’re seeing in the underlying economy,” Tom Hainlin, global investment strategist at Ascent Private Capital Management, said.
“The question everyone has is how far has the market gone ahead of where the market needs to support those prices.”
A report this morning from the Labor Department confirmed that 3.84 million new unemployment claims were filed last week. Consumers are weakening, too, according to data that revealed a 7.5% drop in spending in March, year-over-year.
However, unemployment claims are slowing week-to-week. Similarly, it could be argued that spending should’ve shrunk far more than 7.5% during a complete lockdown.
Earnings are now being released by America’s top tech firms, giving investors more information to base their decisions on. Amazon (NASDAQ: AMZN) gathered over $75 billion in revenue and $4 billion in Q2 operating profits, all of which will go toward offsetting coronavirus-related expenses.
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Apple (NASDAQ: AAPL), meanwhile, raked in $58.3 billion in revenue and posted an EPS of $2.55, beating analyst estimates on both accounts.
COVID-19, which has certainly presented tech companies with plenty of opportunities, is posing new challenges as well. Amazon’s guidance wasn’t great. Apple has no idea what the rest of the year will look like.
How that materializes on the charts could determine whether or not equities go higher from here.
Thankfully, there’s a handful of stocks that completely shrugged off today’s losses. Better yet, they could also soar if the general market does. Or, conversely, climb slowly if it doesn’t.
Marsh & McLennan (NYSE: MMC), a global insurance and professional services firm, actually did very well during today’s mostly bearish session. The stock has fallen-off since hitting its April high, but still has plenty of potential.
Over the last month, MMC set two higher lows and today, it managed to close trading above its minor bearish trend (represented by the trendline in yellow) and the 10-day moving average.
Should MMC trade above its daily high by a significant amount, it might make sense to go long with a trade trigger of $99.00.
If the market stalls, MMC could still see some nice gains. It’s a stock that seems keen on “doing its own thing.” When faced with uncertainty about the market as a whole, that’s a very welcome gift I’m sure all traders could appreciate.