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Today’s Summary
Thursday, March 5th, 2020
Indices: It was another bad day for US stocks, with the Dow Jones Industrial Average tumbling 970 points or 3.58%. The S&P 500 and Nasdaq dropped 3.39% and 3.10%, respectively. The Russell 2000 shed 3.42%.
Sectors: All 11 sectors closed lower by at least 1.50%. Utilities led, but still closed lower by 1.54%. Industrials lagged, dropping 4.89%.
Commodities: Crude Oil futures moved lower by 2.52% to $46.01 per barrel. Gold futures soared 2.15% to a multi-year closing high of $1,673 per ounce.
Currencies: The US Dollar Index dropped 0.76%.
Interest Rates: The US 10-year Treasury yield fell to 0.918%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
The 2018/2019 "bottoming process" (it was indeed a V-bottom) saw a gnarly undercut on Day #6 (also a Thursday). The following day (Friday) markets ripped higher and never looked back. Just another potential scenario to keep in mind. $SPX $SPY pic.twitter.com/U1F1eFXRtF
— Ian McMillan, CMT (@the_chart_life) March 5, 2020
Today’s Chart of the Day was shared on Twitter by Ian McMillan (@the_chart_life). It’s a daily candlestick chart of the S&P 500 index during the 2018-2019 “bottoming process.” After last week’s sell-off, the question many are asking is whether the S&P 500 will retest Friday’s low, or stage a sharp V-shaped recovery like it did in 2018-2019. In case you forgot, the S&P fell 19.78% in Q4 2018, just a few basis points short of bear market territory. Ian points out that the index saw a “gnarly undercut” on the Thursday after the Christmas eve low. Price broke below the lows of the prior three days, leading many to believe that the sell-off was not over and that the index was on its way to retest the lows. Instead, the market gapped higher on Friday and never looked back. While we can’t expect price action to play out exactly as it did in 2018-2019, it’s still worth considering this as a potential scenario going forward.
Quote of the Day
“Sometimes you will never know the value of a moment until it becomes a memory”
– Dr. Seuss (Author)
Top Links
The Dow Gained Nearly 1,200 Points on Wednesday. Why It Probably Doesn’t Matter – Barron’s
In this article from Barron’s, several respected technicians weigh-in on the current market environment.
What a Persistently Elevated VIX Means for the Market – Andrew Thrasher
Volatility expert, Andrew Thrasher breaks down past instances where the Volatility Index ($VIX) remained elevated after a sell-off.
10-Year Treasury Yield Drops Below 1% – LPL Financial Research
The team at LPL Financial Research discusses the epic decline in the 10-Year US Treasury yield.
Never Confuse the Bottom of the Page with Support – Sierra Alpha Research
David Keller explains why he thinks the path of least resistance is higher for US Treasury Bonds.
How Stocks Perform After the Fed Cuts Rates – Of Dollars And Data
Data scientist, Nick Maggiulli examines how stocks have historically performed following Fed rate cuts. The post is packed with fascinating insights and great visuals.
Top 10 Tweets
Daily S&P moves over the past week or so:
-3.4%
-3.0%
-4.4%
+4.6%
-2.8%
+4.2%Feels like Aug 2011 during the European debt crisis that saw this occur over a weeklong period:
-4.8%
-6.7%
+4.7%
-4.4%
+4.6%— Ben Carlson (@awealthofcs) March 4, 2020
The current market is being compared by some to the Aug-Oct 2011 European debt crisis market, where an 18% decline was followed by a series of wild swings in both directions. In case you were wondering, this is what it looked like. pic.twitter.com/w13DWTj8Fm
— Walter Deemer (@WalterDeemer) March 5, 2020
The 2011 "bottoming process" on the S&P 500 saw a total of 48 consecutive trading sessions with $VIX closing above 30. pic.twitter.com/ULQii7PnIs
— Adaptiv (@adaptiv) March 5, 2020
Realized Vol is getting extreme – for instance the 10d Ave Range is *almost 4%*!
Bull or Bear markets, this craziness mostly led to V-shaped rallies or retests/basing.
But whoever compared this to '08.. *not even close* – you had to be 2x taller for that ride!$ES_F $SPX $SPY pic.twitter.com/fGwnP5OYf4
— Macro Charts (@MacroCharts) March 5, 2020
All 11 S&P 500 sectors declined more than 6% in February. You have to go back to October 2008 to find the last month that happened. pic.twitter.com/jtDyyUadRq
— Mark Minervini (@markminervini) March 5, 2020
Reading the financial media, it seems current market volatility is being linked to those crazy days of 2008.
So far this year, we have had 5 daily price swings of 3% or more.
During 2008 we reached 42 of those! $SPX $SPY pic.twitter.com/H5zkEP1Ant
— Tiho Brkan (@TihoBrkan) March 5, 2020
Bad sign if transports don't hold here $IYT $SPX $SPY $DJIA $DIA pic.twitter.com/SfytSlXwFV
— Mr. ? CMT (@topstockcharts) March 5, 2020
$GDX STILL hasn’t seen the big breakout yet… pic.twitter.com/4Xte2Z6K3F
— Frank Cappelleri (@FrankCappelleri) March 5, 2020
Treasurys play a role in every portfolio – sometimes just as dry powder, sometimes as a hedge and sometimes as insurance pic.twitter.com/mB1kZajopv
— Downtown Josh Brown (@ReformedBroker) March 5, 2020
Chinese stocks making a 2-year high today is probably something that could win you a lot of bets this weekend.
Odds are virtually no one in the US realizes this is happening. Look at Chinese internet stocks for example, firmly in the green today.
— Ryan Detrick, CMT (@RyanDetrick) March 5, 2020