March 20, 2020

Markets Set To Bounce, Is It A Buy?

Markets Set To Bounce, Is It A Buy?

Investors are scratching their heads and asking themselves one question if this is the time to buy equities given the fact that markets have started to recover some of their losses. For instance, the US markets closed in positive territory yesterday, and the momentum was picked up by Asian markets overnight. Today, the European and US futures are trading strongly higher as well.

To put some numbers in perspective, the S&P closed up with a gain of 0.47%, the Nasdaq—the strongest index during the current turmoil—jumped 1.58%, and the Dow Jones surged by 0.95%. As for the Asian markets, it was the Nikkei index that closed in negative territory, and all the other major indices closed higher with decent gains.

Convinced?

The fact is that central banks are on their A-Game and they have learned their lesson from the financial crisis.  Central banks are not willing to repeat the same mistakes.

In addition to this, we have experienced cohesive fiscal support from governments, something we have discussed previously. What we needed was a combination of both to restore confidence and we have that so far.

In fact, the policymakers around the globe are continuously assuring us for more support and this has made investors optimistic about the current rebound.

Moreover,  there are strong signs that China has seen its peak of the outbreak of coronavirus and the public is gradually returning to work. Perhaps, all of us should be focusing on China for the second biggest economy of the world was the major concern for investors.

They were worried about the slowdown in the Chinese economy and given the fact that China has seen the peak of coronavirus, and things are returning to normal, I believe it is a positive sign and also presents an opportunity.

Yes, I agree with the fact that Europe and the US have not seen the peak of Coronavirus outbreak yet, and the situation may become direr first before it improves. Therefore, if one is a conservative investor, then perhaps one may want to hold their horses. However, for investors with a bigger appetite of risk, I believe the current situation is a call for action.

This is because the big discounts for solid stocks are already fading. Stocks such as Amazon, Tesla, Microsoft, Alibaba, Alphabet, Tencent are on the move, and there was a huge rally in the banking stocks as well yesterday.

24% Jump, Is it still a buy?

As for the energy sector, the best time to buy oil was when it trading near $20, yesterday’s rally of 24% recovered all the losses from Wednesday. President Trump may act as a mediator to ease the oil supply war between Saudi Arabia and Russia, and if we see the oil supply war coming to an end in the form of an agreement to curtail the oil supply, we could experience a massive rally in oil price. So, if one is thinking of buying oil now, they need to be mindful that the stop loss is pretty decent, it needs to be below $20, and the target price should be the mid-30s.

Bitcoin: A Huge buy signal?

When it comes to Bitcoin trading, the crypto king is on fire, and we have seen a decent rally. Given the fact that the price has crossed the $6K mark—an important level of resistance—the upward momentum is likely to pick up the pace, and if the price crosses the 200-day moving average on a daily time frame, it would be a huge buy signal.