Chart of the Day - Monday, March 9th, 2020

Today’s Chart of the Day was shared on Twitter by Jurrien Timmer of Fidelity Investments (@TimmerFidelity). It’s a daily bar chart of the S&P 500 going back to December 2018. Stocks continued to plummet in today’s session with the S&P 500 crashing 7.60% marking the worst day for the index since the Great Financial Crisis in 2008. The S&P 500 is approaching bear market territory as it’s currently down nearly 19% from the peak (18.93% to be exact). The index is already about 10% below the 200-day moving average. As Jurrien points out, that’s nearly as much as it was above the 200-DMA at the peak in February. As we know, markets are like rubber bands in the sense that when they’re stretched too far in one direction, they snap back in the opposite direction. The fact that price is getting pretty stretched below the 200-DMA suggests that we could be due for some mean reversion in the near-term to test the 200-DMA from below. However, beware that bad things tend to happen under the 200-day moving average.