Stocks rose 1.6% today as investors felt optimistic about governments around the world reopening their economies amid the coronavirus outbreak.
In addition to some U.S. states, Italy, Germany, and France said they're also looking to ease the quarantine policies that have been in place for the last two months.
If economies can reopen and consumers feel confident, stocks could continue to rally.
But if the COVID-19 curve starts to steepen as a result, that would likely send stocks lower. And we could break through the recent lows made last month.
Here's what our experts - Chris Johnson, Tom Gentile, D.R. Barton, Jr., and Shah Gilani - think investors should be doing with their portfolios this week.
Chris likes Zoom Video Communications Inc. (NASDAQ: ZM) and thinks it's worth buying on any pullback. Set a limit buy order for $130.
Chris is closely watching the earnings reports from Alphabet Inc. (NASDAQ: GOOGL), Facebook Inc. (NASDAQ: FB), and Microsoft Corp. (NASDAQ: MSFT) later this week.
He's noticed that a smaller number of companies (especially these tech companies) has been propping the indexes up. Historically, that hasn't worked out well for most stocks in the long term. Sharp declines in market breadth in the past have often signaled large market drawdowns.
Chris noticed that we're trading on below-average volume, signaling that investors aren't particularly confident in this rally. When volume comes in, markets will move dramatically one way or the other.
Chris expects about one week more of upside, then a drawdown could ensue as momentum reverses due to narrow breadth in stocks. Chris recommends buying puts on the S&P 500 will be profitable in the medium term.
Tom covered the current expected volatility options traders are pricing into stocks today.
Although volatility appears to be on the way down, Tom thinks it could spike. If earnings don't meet expectations and people aren't confident in governments reopening the economies, volatility could return.
Tom will be watching the earnings reports from tech giants like Amazon.com Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), and Tesla Inc. (NASDAQ: TSLA).
Tom used his proprietary options software from Tomsoptiontools.com to review the chart of each of these companies and how you could play each with options. You can get all of Tom's trades from today here.
Last, Tom explained what's going on with the United States Oil Fund LP (NYSEARCA: USO).
Since oil traders are now only allowed to close their June and July oil future positions, investors are selling it off. Stay away from USO.
Shah thinks investors will be rewarded in the long term buying oil now, around the $10 level.
In the short term, however, he's worried about over-leveraged oil companies and the banks that lent money to them:
Shah thinks KeyCorp (NYSE: KEY), currently trading for $11.60, will go lower and retest the $10 level.
Huntington Bancshares Inc. (NASDAQ: HBAN) is also under pressure. Shah thinks the company will have to cut its 6.7% dividend and the stock will likely go lower.
Catch us tomorrow - starting LIVE again at 8:45 a.m. EDT with Chris Johnson, right here.
If you missed our live streams today, you can now replay them on our YouTube channel, here.
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