April’s stock market rally has been wild to watch as indexes pop on any kind of positive news concerning the coronavirus pandemic. And while the upward trend may face some uncertainty in the coming months, there are still plenty of opportunities for savvy investors.
Banyan Hill Publishing’s Jeff Yastine doesn’t see the rally ending in the near future, but he thinks it could face some headwinds later in the year.
Banyan Hill’s Jeff Yastine
“I expect the market rally to continue to churn higher from here, through at least Memorial Day, and on into June for that matter. New all-time highs, or getting very close to them, are not out of the question,” said Yastine, Editor of
While Yastine doesn’t consider himself to be super bullish, he thinks a few things are happening in tandem to help fuel the near-term rally — and his optimism for it.
“One, the market reached some pretty huge extremes in pessimism in February/March, bordering on true panic. Now we’re on the flip side of that panic as investors realize the virus outbreak is not the zombie apocalypse,” Yastine wrote via email.
There have been some terrible economic reports surfacing over the last few weeks, including another 3.84 million reportedly applying for unemployment last week, bringing the total to 30 million jobless claims in just six weeks.
Yastine, who is also an Emmy-nominated anchor and correspondent with PBS’s Nightly Business Report (1994-2010), thinks markets were already pricing the bad news in. And it’s only a piece of the cocktail that is fueling this stock market rally higher.
“Investors are realizing that life goes on — even if we have to wear a mask while we’re living it. Yes, earnings are bad and the economy’s weakened dramatically — but everyone has been expecting that news for many weeks. It’s certainly no surprise,” he explained. “Stir in a few trillion in stimulus, add a blank check from the Federal Reserve and hope for a V-shaped recovery as America gets back to work … and there’s our stock market rally.”
Will the Stock Market Rally Rage On?
The S&P 500 popped off more than 10% in April to finish its best month since 1987, but some are worried that the rally is starting to show cracks. Societe Generale is projecting the index to finish 2020 at 2,715 points, which is down 7% from Thursday’s close.
And Yastine warns the rally could face some headwinds starting in summer.
“The bigger risk for the market lies in the second half of the year,” he said. “The market has to navigate the late summer dog days, when we could see more doubts arise from investors. The uncertainty of the November elections represents a major risk as well.”
But that doesn’t mean investors should sit on the sidelines.
“I have been telling my Total Wealth Insider newsletter subscribers that the challenges ahead should NOT deter them from buying stocks,” Yastine wrote. “But they need to be smarter and more selective.”
Yastine’s Total Wealth Insider focuses on “transformative” companies working on converting outdated products to take advantage in the digital era. And he sees plenty of opportunity in the stock market rally.
“Stocks with lots of assured growth ahead and little or no debt are still good choices — preferably if they’re not already trading at or near new all-time highs after the recent ‘rocket rally’ of the past few weeks,” Yastine wrote. “So that largely means avoiding the tried-and-true big-cap names (which form a huge chunk of the S&P 500’s market capitalization) and instead focus on mid-tier and small-cap companies.”
He also has his eye on something we have been touting here at Money & Markets for the past few weeks:
“Companies in the middle of turnarounds are good to look at,” he wrote. “So are mining companies, many of which are still trading far below their highs of the last 5-10 years even with gold not far from notching new all-time highs.”
So while the stock market rally goes on, maybe it’s time to look for a little opportunity.