The stock market rallied sharply on Monday, April 6, adding over 1,600 points and closing at the best levels of the day. This morning (April 7), we were up by an additional 800 points as optimism about a “flattening of the curve” is being stoked by good news out of Italy and Spain that the death toll from COVID-19 is beginning to level off. New York City also reported improvements in the numbers. All very good news from a human standpoint, and hopefully we are beginning to see a trend.

I think it is important that we understand the difference between our emotional response to the good news and the economic realities that we face. I am by no means throwing water on the hope and enthusiasm created by the good news, and I pray that we are turning the corner. We need to be careful, however, that we don’t assume that the emotional reaction in the stock market is a sign that prices will go straight up from here. Remember that short-term emotion is not always indicative of the longer term trend. We saw that on the downside, and we need to be aware that recoveries are rarely a straight line phenomenon.

The markets will continue to be volatile because we are in uncharted territory, and until we see clarity on the health crisis and the economic effects of the shutdown the markets will continue to be “news driven”. That means that we are likely to see wide swings in prices on the upside as well as the downside. From a longer term perspective, we remain extremely bullish and view the current market conditions as an opportunity. Stay the course and remember that “things are never as good or as bad as they seem” Stay safe!