- After retracing 50% of its decline, the S&P 500 index has suddenly become range-bound
- Can Chevron (CVX) finally see a sustainable rally?
- What does Invesco’s (IVZ) dividend cut tell us about the future?
After retracing 50% of its decline, the S&P 500 index has suddenly become range-bound
The rally in the morning yesterday hit a wall in the noon-time hour after reports that Gilead’s (GILD) drug Remdesivir “flopped” in its first trial hit the news-tape. The company quickly stated that the studies for the coronavirus treatment is still inconclusive…and several analysts stated that the drug still has a 50/50 chance of succeeding…but that was not enough to keep the stock from closing down 4% on the day. It also led the broad market to finish the day unchanged (and 1.65% below its morning highs). The big reversal came on a decent sized jump in volume…as the composite volume was 15% higher than the last nine trading days. (We didn’t go back a full two weeks because using 10 trading days would have included March’s expiration day.)
Since we started the week last week, the S&P 500 has traded in the relatively tight range of 5.8%. This means that the range of the last nine trading days has been smaller than the single-day ranges we saw on several occasions during the stock market crash of February and March! In other words, things have definitely settled down ever since the S&P retraced about 50% of its Q1 losses…and the market seems to be nearing an inflection point. As we’ve said many times, this is exactly where the “first bounce” stalled-out in the bear markets of 2000-03 and 2007-09, so if the market rolls over any time soon, it could/should raise the level of volatility once again. Either way ...