On the surface Thursday seemed like a pretty good day for the market. The S&P 500 rose +0.58%. And the tech heavy Nasdaq was even better at +1.66%.

However, under the surface something much more sinister was brewing. Because in reality it was a nasty “Risk Off” session that is often a precursor for a much bigger drop ahead.

Now juxtapose the attractive gains for the blue chip indices above versus the very painful losses of these vital industry groups on Thursday:

-1.12% for large banks (IYF)

-3.68% for regional banks (KRE)

-4.54% for oil producers (XOP)

-6.30% Non-metallic Mining (from finviz)

-6.63% for US airlines (JETS)

-8.10% REITs for Retail (from finviz)

Do you see the problem?

If not, then let me spell it out for you. This is extremely bearish because investors were only clinging to the safest of safe names. Like a return to the FAANG stocks pushing Netflix and Amazon to new all time highs.

But the real economy…the one that is most negatively affected by the Coronavirus, continues to sell off. This is likely step 1 of 2 leading to the bear market getting back on track with lower lows ahead.

Yes, I understand that the market has bounced mightily from the from the March 23^rd low. But I also understand how often bear markets provide seemingly impressive rallies just before heading lower and lower.

Heck, that happened twice during the Great Recession in October 2008 and once again in late November 2008 before tumbling another 29% lower until a real and lasting bottom was found much later in March 2009.

Hey, but what about the Gilead drug Remdesivir trial results?

Yes, that is the main story causing stocks to rise Friday. The trial results are promising for society and we all cheer the possibility that it could help mitigate the effects of Covid-19.

Unfortunately I am sorry to say that it is already too late for it to prevent the recession that is unfolding now which will beget lower corporate profits which will beget lower stock prices. That’s because we already have more job loss in 4 weeks, then all of the Great Recession. And that will continue to get worse over coming weeks and months based on the following chain reaction:

Job loss > lower income > spending > lower profits > more cost cutting > more job loss

And that cycle continues for many waves which is why the average bear market lasts 13 months and we are not even at month #2 at this stage.  So the excitement over Remdesivir will likely be short lived especially since it is not a vaccine to prevent contraction of the virus.

What to Do Next?

Prepare your portfolio for the likely return of the bear market.

If you need any help with that, then please join me Thursday April 23^rd for my new webinar presentation: REVISED Stock Market Outlook 2020.

At this webinar I will cover all these timely topics:

• Proof that the bear market is still in charge
• Strategies to profit EVEN during a bear market
• Top 10 picks for the bear market
• Bull market watch and how to load up when the time arrives
• And more to get you ready to enjoy more investment success in the year ahead!

Please join me, and investing legend Adam Mesh, for this live webinar to get you better aligned for what the market offers investors this year.

Just click the link below to register for this vital event:

4/23 REVISED Stock Market Outlook

Wishing you a world of investment success!

Steve Reitmeister

…but everyone calls me Reity (pronounced “Righty”)
CEO, Stock News Network

Editor, Reitmeister Total Return

SPY shares were trading at $285.58 per share on Friday afternoon, up $6.48 (+2.32%). Year-to-date, SPY has declined -10.75%, versus a -10.75% rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...

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