March 5, 2020
Over 3% Fall in All 3 Indexes
Dow Avoids Another 1,000 Point Loss, but…
There is strange ring developing in the stock market lately. The sound of down a thousand points, up a thousand points, down a thousand points, up a thousand… you have heard it. Today was down. A lot. Over 3% across the board in another deep, dramatic fall in all the major U.S. stock indexes. But, at least the Dow did not fall 1,000+ points again. It “only” dropped 969. No way am I making any light of this market correction. However, the day-to-day near 1,000 point swings is absurd. Who buys one day and sells the next? And then buys back day three? This volatility is unheard of. As a professional investment advisor for over 35 years, I must say I have not seen it all. I have never seen this.
So, here it is. Another Market Update after another big down day. Yesterday’s was more fun and a lot more positive. Today’s reversal sell-off went a long way toward erasing yesterday’s up day. Yesterday’s “Biden Bounce” became today’s “Coronavirus Crush”. Here’s the scoreboard:
This chart of the Dow since July reflects one the most convincing pictures of a bull market ever seen. There is a bullish support level that is tested 7 times. Note the solid black line. It’s the market’s 200-day moving average. There is double top formation with an ensuing break-out to new highs on above average volume. Note the Dow’s 27300 level on left side. There is support at the 50-day moving average. Note the solid red line. The market made 4 bullish bounces off that line. The beginning of the end to that bullish advance was Monday, February 24. Note the glaring gap down that day through the 50-day moving average on massive selling volume. It was in a word, the “coronavirus”. For now, the all time high for the Dow was the February 12, 2020 close at 29568. The Dow has dropped over 11.6% since then.
Today’s 969 point loss made the all-time-top-five. Can’t say it enough; tremendous volatility.
I said it in my most recent Investor’s Edge podcast in the TalkPod. I have noted it many times in my weekly ERPE Excerpts, and here in what has become too frequent Market Updates; FUD is extreme. Fear-Uncertainty-Doubt. FUD has investor sentiment in its grip. Not my opinion. The “Fear Gauge” shows that. Investor sentiment remains pressured by the continued uncertainty associated with the spread of the coronavirus. The market has a confidence crisis driving volatility up and stock prices down.
I said this yesterday, “Expect more volatility. The market price swings will continue. I expect at the end of the experience, the score will remain tied. Better yet, as more rational heads prevail, the up 1,000+ point day moves should outnumber the down.” I am saying that again today.
Hope this is helpful.
Thank you for your continued trust and confidence. I remain vigilant as I manage and oversee your investment account.
John