Hey folks, we’ve see some of the worst price action in history over the past few weeks. Get my take on the current market and price action below;
Weekly Sound Bites;
• Stores are closed, restaurants are empty, travel plans cancelled and planes not flying and manufacturing and production facilities are shut down; essentially the US Economic machine as been dramatically curtailed in order to fight the COVID-19 pandemic, a true Black Swan…The DOW has fallen over 10,000 points in about 3 weeks or 35% with all other major indexes also getting gut punched! This week alone the DOW fell over 17.3%, which is second only to Black Monday’s 1987 crash. This has of course spurred a dash for cash as all asset classes, even traditional safety havens have seen drawdowns…
• Over $12 Trillion has been evaporated from the US Markets in less than 30 days with this past week being the worst hit to the markets since the financial crisis in 2008…The FEDs kicked things off early last week by surprising the markets with a full point down to the 0% to 0.25% range followed by other commitments in the repo markets and commitments of more bond purchases to include municipals…we did see Treasuries move lower with yields moving higher which is the opposite of what we should see but in extreme market conditions cash is king…I will say however, that historically, the first meaningful rise in bond yields after a significant market collapse, both in yields and in stocks has typically been a good indication that the market rout is near its end…
• Flattening the Curve is another term widely being used now to describe the near term goals of isolation, reduction, repair and recovery techniques…the number of new cases reported here in the US, which is expected to move higher over the next few weeks, should hit an inflection point or peak and then start moving lower, at least in judging what was faced in China and South Korea…this will help shift the mood of the markets and price action…Now it will be up to the Politicians to do what the FED cannot do with monetary action. Only the US Gov can deploy Fiscal measures to lessen the blow and impact of a stalled economic engine, but bold action is needed and not half measures…
• One bit of good news on the near term treatment of COVID-19 is the use of a combination of Hydroxychloroquine and Azithromycin from a French study indicating it has shown to be able to completely cure a patient in 5 days…more on this and other drugs, if proven true, can hasten the departure of this Virus and allow the business community to get back to work…time will tell..
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