Put Your “COVID Cash” to Work!

Most Americans have some extra cash in their pockets these days.

No one’s going to concerts or the movies during the coronavirus shutdowns – and they certainly aren’t eating out very much, either. One side effect of the pandemic is that these difficult circumstances have convinced many families to set more money aside for a rainy day. In fact, the national savings rate just hit its highest level since 1981!

That’s right — Americans had $2.17 trillion in savings at the end of March after the savings rate surged to 13.1%, according to United States Bureau of Economic Analysis.

While a few extra bucks in the bank might ease your worries, it certainly won’t grow your wealth. With rates at historically low levels, you won’t earn much from a money market or savings account right now.

Don’t get me wrong — I think it’s great that people are getting into the habit of saving again! Plus, that money could be put to work in the markets once people have a little more confidence in the economy.

Unfortunately, most investors don’t trust the stock market right now. When they see bad news on the TV and ugly headlines in their morning newspaper, they hide cash under their mattresses. They want to wait for sunshine, rainbows, and blue skies before putting their hard-earned money to work.

That’s a big mistake. Markets aren’t good or bad. As traders, we know there’s money to be made no matter what the markets do. Remember, there were short sellers who realized huge gains when the market crashed earlier this year. And plenty of traders have since profited from the ensuing rally.

Huge opportunities exist in this market (yes, right now!). The Nasdaq Composite just cranked out six straight days of gains in a row as of Monday’s close. Tech stocks — especially those that help our remote workforce — continue to lead the market’s snapback rally. The tech takeoff is alive and well!

COMPAQ chart

Meanwhile, the S&P 500 is holding strong above 2,900. That’s well above our 2,800 line in the sand we discussed numerous times as the recovery rally pushed higher. The April highs are now within striking distance, potentially triggering the phase of this incredible rally…

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Chart of the Day: Biotech breaks out

Greg GuenthnerEarlier this week, I showed you how the Nasdaq Composite’s impressive run has now pushed this market-leader back into positive territory for 2020.

We have the big tech stocks to thank for this recovery. Amazon, Apple, Microsoft and other household name Nasdaq components have done most of the heavy lifting since the market bottomed in March.

But another tech group is looking to get in on the action.

Check out this chart of the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB):

IBB chart

Every week, we see a different biotech in the news as the race continues for COVID-19 treatments and a working vaccine. But even a broad industry bet on this ETF is working out just fine for the biotech bulls. It has gained more than 40% off its March lows and is now pushing above its 2015 peak to new all-time highs.

Trading Tip of the Day

An old Xerox of famed investor Marty Zweig’s Investing Rules is making the rounds on Twitter this week:

investing rules

These are all gems, but some stand out more than others during these unusual times we’re living through right now. Now more than ever, it’s important that we adapt to change as we find ourselves suddenly stuck at home.

Rule No. 9 is also crucial. Don’t let your opinion of the news or economic data bias your trading. Investor sentiment is decidedly bearish right now. Don’t let that stop you from making those bullish bets as the market continues to baffle the herd and streak higher!

— Greg Guenthner

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Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

Transitioning from a clerk to a floor...

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