Jerry Samet
03-21-2020, 12:05 PM
The selloff continued yesterday. The market opened with small gains but quickly turned around and started falling when New York announced a virtual lockdown on the state. The selling continued into the close and all the major averages finished at or very near their intraday trading lows. The COMPQ and the NDX fell 3.79% and 4.04% respectively. The SPX lost 4.34%. Volume was higher across the board. It gained 4.92% on the New York and 4.19% on the Nasd. Much of the gain was likely due to quadruple witching that occurred yesterday. Leading stocks were lower as well with the leaders index falling 2.53% on the day. The index closed low in its trading range but did better than the overall market. Volume was much higher and well above average. The market continued its decline yesterday as early strength was lost due to more selling. The news from New York rattled the market. The lows of the day for the major averages held above the lows of Wednesday and so the technical rally attempt is still in place. There were a couple of more encouraging items yesterday. The number of new lows dropped a lot yesterday and the decline in the A’s minus E’s has slowed quite a bit. It has not turned up but gains next week could change that. These items lead me to believe that the market is trying for a short term bottom and may well rally a bit next week. That could change if there is more bad news on the virus outbreak. We could well have a follow through next week as the lows held and the extreme volatility could cause a large rally day. The odds are it would fail quickly. The weekly Coppock is negative but has a strong head of steam on the downside and the %E’s are at extreme levels. If there is a follow through it will likely be poorly confirmed. Bear markets have countertrend rallies and some can be tradable, but there is so much uncertainty out there and so much damage has been done that caution should be used if it happens. I don’t think there will be an important bottom until there is some light at the end of the tunnel and we get some idea when things might start to get better. Until then stay at the beach. Jerry