It'll Do till the Mess Gets Here

Another surge in the major market averages is leaving many market players rather dumbfounded as to how a global economic shutdown for this amount of time can inspire equities to keep rallying in this manner. Naturally, The Fed and the actions of the federal government will be seen as obvious reasons insofar as their supporting of liquidity and backstopping various asset classes like junk bonds. 

But another possibility is that the market is simply willing to give various firms time to ride this out, at least for now. Should various state and municipal economies start opening back up in early-May without another dreaded outbreak of the virus it may be sufficient to justify the current squeeze/rally, assuming that relatively rosy scenario actually comes to fruition. At a minimum, the respite from the market pricing in worse scenarios back in March has allowed the likes of AMZN NFLX TSLA to flourish. 

And then there is a more sobering theory: Perhaps this is still a mere relief rally bound to fail, despite the seemingly invincible nature of the market at this point. Case in point, note that the Nasdaq Composite Index is testing its 200-day moving average today for the first time since early-March.

If AMZN at new all-time highs, and NFLX not far from its own, is only good enough to get the Nazzy back to its 200-day, one has to wonder if bulls may have used us too much buying power too soon. Of course, unless the Nasdaq fails at this level, this conversation is wholly academic. 

Turning to fresh ideas, Hormel (HRL) looks particularly strong. Considering they sell pork products amid the Smithfield closing, Hormel should pick up considerable market share assuming they can stay open, too. 

Overall, despite the index rally the action below the surface seems spotty and mixed. This market may not be a full mess right now, but If it ain;t it'll do till a mess gets here.