While the human cost of 2020’s Covid-19 epidemic was absolutely dreadful, for those of us lucky enough to avoid virus’ deadly grip, when life gives you lemons, you make lemonade. This unprecedented economic situation turned into one of the greatest swing-trading opportunities in history. Prices crashed harder than ever before and since the market loves symmetry, that shocking collapse turned into the fastest rebound on record.
It took the S&P 500 33 calendar days to fall 34% and 77 days to rebounded 45%. Talk about a swing-trader’s paradise.
The crowd has been obsessed with phenomenally positioned companies like Zoom Video Communications, Teledoc Health, Amazon, and Netflix. Other companies found themselves on the wrong end of these government-mandated shutdowns, like Unite Airlines and Carnival Cruiselines. The most vulnerable stocks turned into unbelievable shorts. Covid gave us an unending list of outstanding trading opportunities and most traders found themselves with far more ideas than money.
It is easy to get caught up in the hype surrounding Covid’s biggest winners and losers. But could there have been a better way to trade these wild gyrations? That’s what we are about to find out.
For this analysis, I focused on the Covid collapse that occurred between February 19th and March 23rd, 2020 and the subsequent rebound from March 23rd and June 8th, 2020. I picked these dates because they represent the pre-collapse highs, the lowest day of the selloff, and the top of the subsequent rebound.
Since everyone loves a good darling story, lets talk about the Covid winners.