Controversy is swirling about the proper definition of recession. The more important question is whether the U.S. is in one. A market-based indicator, the spread-versus-Treasurys on high yield bonds, says the answer is no.
Now bulls they need to take back the 50-day moving average of the S&P 500. I doubt they will be successful. There is a world of difference between short covering rallies and broad-based, bullish advances.
If KMI closes above $18 at expiration on October 14, we would earn $0.65 per share on $17.35 at risk, or 3.75%. That would be an annualized return of 38% over a holding period of 36 days.
If DVN closes above $70 on October 21, we will be assigned and earn $6.45 per share (including the dividend) on $65.10 per share at risk, or 9.9%. Over a 43-day period, that would be an annualized return of 84.1%.
Violent short-covering rallies are common in bear markets. And given that the S&P 500 has been spiraling lower for nearly two weeks, a snapback was long overdue.