COVID-19’s peaking in the U.S. and stocks are rising.
Could it get any better for Wall Street?
Apparently, yes, it could.
The market soared this afternoon following Sen. Bernie Sanders’ announcement that he could drop out of the 2020 presidential race. With America’s top socialist on ice, investors – both of the institutional and retail variety – felt confident buying.
The Dow and S&P climbed over 3% on the day while the Nasdaq Composite rose 2.24%.
Biden is considered a much more “market-friendly” candidate by comparison. Several of Sanders’ key policy proposals would’ve likely resulted in tax increases – something by which scores of business owners and investors would not abide.
The Democratic nomination is quickly approaching and Biden’s currently seen as a “shoe-in.”
His chances against Trump for the presidency, however, are less certain. But even if Biden wins, stocks should be able to absorb the blow.
A Sanders presidency would’ve seen a near-instant downturn.
“Sanders’ exit removes the tail risk of some of his policies, immediately sets up focus on Biden vs. Trump,” Ed Mills, Washington policy strategist at Raymond James, said.
“Biden’s policies will get a new scrutiny now he is the presumptive nominee, but the truth of the matter is that the market will be looking towards Washington more to help the economy and much of the assistance matches his platform.”
The focus is entirely on COVID-19 now that Sanders is done. The other economic “landmine” has been defused.
And if the outbreak is peaking – something Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), said could happen this week – the market might be ready for a turnaround, too.
“If the curve is bending, for the first time, some time-line is coming into focus for restarting at least parts of the economy,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “This means investors can start to reduce their best guesses as to how long this recession will last and even if the recession is very deep, if its duration can be shortened and known with some greater clarity, this would tend to raise the value of the stock market.”
And though many stocks are eyeing a breakout after today’s lift, a few have distanced themselves as candidates for a particularly huge leap.
One of them – Pinterest Inc. (NASDAQ: PINS) – just achieved a major milestone that should have bulls feeling excited.
After rising above the 10-day moving average on Monday, PINS ran right into key resistance (represented with the yellow trendline) yesterday.
Today, it burst above resistance and managed to close just above the upper Bollinger Band (BB). Typically, we wouldn’t take a trade buried in the upper BB, as it is likely to come tumbling back down.
However, after having its IPO in April 2019, the stock has done little but drop. To be fair, the company had the misfortune of going public 10 months before a pandemic hit.
I don’t think anyone saw that coming. Not even the staunchest PINS bears (if they actually exist).
Now, though, share prices are rising. The stock set a higher low last Friday and despite soaring since then, the stochastics indicator remains below 80, suggesting that PINS is not yet overbought.
If the stock trades higher, it might make sense to go long with a trade trigger of $17.00.
That’s not to say PINS will return to its all-time high of $36.83 any time soon.
It probably won’t.
But the stock still looks destined for a continued rally as COVID-19 hits its peak and declines. Once we get clear of the outbreak, PINS could fly even higher.
All while sheepish investors wish they would’ve gotten in earlier on a true “post-crash winner.”
