As I’m writing this, US futures are indicating about a 4% rise in the domestic stock market   …after about a 7 1/2% fall yesterday.

I was particularly struck by the weak performance of energy stocks on Monday.  Despite yielding 6%+, Exxon (XOM) was down by 12.2% and ended the day yielding 10x the 10-year Treasury.  Shale oil-related issues like Occidental (OXY)  at -52%, with a 9.6% yield, or WPX Energy (WPX) at -45% were hit very hard.  The sector as a whole dropped by 20%.

In the premarket, XOM is +8%, OXY +23%, WPX +14%.

I mention this not because I’m a fan of oil–it’s the new tobacco, in my view, which is not a good thing (this is much more evident in Europe than here).  It’s because daily moves like this are real headscratchers.  It’s either total panic by humans or AI run amok.  I don’t know which.  But the company fundamentals certainly haven’t yo-yoed like this in two days.  If I were convinced real people were either panicking or being caught out by margin calls I’d be much more comfortable buying.

Buying or not, from a tactical viewpoint I do think it’s important for investors to look carefully at the price action from yesterday as well as what today brings, assuming there’s follow through to the upside.  Prices during times like this are chock full of information.  The ideal combination would be outperformance yesterday and outperformance today.   The reverse, underperformance both days, is to me a clear danger signal.

As to the market overall, I think time is the main issue we’re facing.  It will likely be hard for stocks to go up until the domestic incidence of new COVID-19 cases begins to decline.  Midyear?  A narrower question, but still important, is when the “stay at home” stocks will run out of steam.  My guess is sooner than later.  Another hunch–I haven’t done any work) is that highly operationally leverages transport stock (meaning all of them?) are riskier than they appear.  After all, we’ve already seen one small EU airline go under.  And the shine may be off cruise lines for a long time.  I continue to find the administration’s efforts to prevent testing and otherwise obstruct treatment of COVID-19 hard to fathom and very scary.  With my portfolio manager hat on, however, the real impending disaster is the Trump fiscal and trade policy.

A point of basic arithmetic:  a stock starts at 100.  It falls by 50% on day one and rises by 50% on day two.  It’s now at 75.  That’s nowhere close to breakeven.  Apply that to OXY.