What a day for Crude Oil as the front month expired Monday prices closed at $-37.63 a barrel. Stocks followed suit closing lower in light trade. Small Cap and Nasdaq stocks faired the best, but still closed lower by more than a percentage point. Tuesday morning Futures are indicating more losses as Crude’s June contract is falling more than 20%. Prices are adjusting to the current environment and many unknowns exist. First and foremost, when and how states and the country will open as a whole is by far the largest unknown. Even if we do open soon how will the consumer behave? A lot of questions remain, and it will take some time to answer. For now, we must rely on price action and containing our risk profile. There is no need to be operating like we are in the wild wild west. Let’s focus in on what we can control and execute our game plan.
We are in a precarious spot with regards to this market. We are seeing signs we may be running out of gas. V-shaped recoveries are a staple of this market environment we have been in, but it does not mean we are going to ramp back to all-time highs. The Federal Reserve Bank has pumped trillions back into the market creating a floor. Will it be enough? No one knows the answer, but everyone is trying to guess where this market is going to head next. Will we see a retest of March lows? Comparing with other like declines like 1998 we did see a retest. Odds do favor a retest or at least the market nearing the lows we saw in March. Either way it will create a bit of panic, but we’ll stay true to our plan remaining calm, cool, and collected.
Have a game plan on how to attack the market. Whatever your timeframe may be but know what it is and build a solid game plan. Risk management must be a top priority and executed without question. Do not find yourself in a position where you do not have any dry powder at hand. The ability to attack is a must and without the ammunition to do so will leave you disappointed. There is no need to be left behind. Attack and win the day.
We wish you the best of luck in this market!
