After cutting the interest rate by 50 basis points the market appeared to have a bit of a temper tantrum showing its disappointment with the Dow closing down nearly 800 points on the day.  The president also expressed disappointment calling for a much deeper cut.  However, after the big win of Joe Biden on Super Tuesday this very emotional market is in rally mode even though this sets up a party battle for remaining delegates that could go all the way to the convention.  We should expect another wild news-driven day as virus news continues to cloud the path forward with tremendous uncertainty.

During the night Asian markets closed mixed and nearly flat as auto sale and service sector numbers plummet as a result of the outbreak.  European markets have recovered early losses and are green across the board while here in the US the futures market points to a huge gap up as this wildly emotional market flop’s all over the place.  Traders should plan for the extreme price volatility to continue as we once again approach another uncertain weekend.

The Economic Calendar

The Earnings Calendar

On the hump day earnings calendar we have about 130 companies reporting results.  Notable reports include ZM, ANF, AEO, CPB, DLTR, GWRE, MRVL, OMI, SPLK, & PLCE.

Top Stories

During the night China reported that vehicle sales dropped 80% and the service sector is down 70% as impacts from the outbreak begin to roll out.

After cutting the rates by 50 basis points the market shot up nearly 700 points in just 7 minutes but in a very volatile session ended the day down with the Dow losing 800 points.

Joe Biden pulled off a huge victory last on Super Tuesday pulling ahead in the delegate count but with wins in California and Colorado Bernie Sanders has enough delegates to set up a party battle into the convention.  It’s going to be a wild election year but it would seem the market is happy that Biden has emerged as the front runner with US Futures pointing to a substantial opening gap.

Technical Speaking

Yesterday’s wild price action volatility moved prices so fast you might have felt a bit seasick just watching the swings.  At the end of this wild ride the Dow had once again failed its 200-day average and the IWM closed back down near its 500-day average.  The QQQ fell back below the 50-day average while the SPY edged down toward its 200-day.  Dark cloud cover candle patterns were left behind on all the indexes but with such extreme volatility I’m not sure that means all that much.  As the US cases of the virus continue to grow we should also see the high volatility continue with so much uncertainty ahead.  As of now US Futures point to a huge gap up seemingly reacting to last night’s election results but keep in mind as news of the virus spread continues to roll anything is possible in the days and weeks ahead.  Hold on tight this rollercoaster ride may have just begun.

Trade Wisely,

Doug

Yesterday we experienced a record-breaking bounce on hopes of a big central bank intervention.  While it was wonderful to get a relief rally in the selling this all or nothing market price action remains very dangerous due to the extreme volatility.  The market loves freshly printed money and lower interest rates but one has to wonder how effective such a move will be against a virus outbreak.  Plan your risk carefully and be prepared for very fast price action and news-driven reversals.  This is not a market for the faint of heart or those without sizable tolerance to risk.  Plan carefully!

Asian markets closed mixed overnight as the RBA cuts the cash rate to new record lows.  European markets are decidedly green this morning on huge stimulus hopes and US Futures point to an extension of yesterdays rally at the open.  It would be wise to note significant price resistance levels are still above in the major indexes.  Chasing this wild rally could prove dangerous considering the wild volatility.

Economic Calendar

Earnings Calendar

On the Tuesday calendar we have 90 companies reporting with a heavy concentration of retail reports today.  Notable reports include TGT, AVAV, AZO, HPE, IGT, KSS, JWN, ROST, URBN, & VEEV.

Market New Highlights

Yesterday the Dow bounced nearly 1300 setting a record for the largest one day gain in history on hopes of central bank intervention.  Overnight Australia cut interest rates to 25 basis points and President Trump has already chimed in urging the Fed to follow suit with a big rate cut. 

Polls are open for Super Tuesday with Burnie Sanders currently leading in delegates but Joe Biden seems to be gaining some traction getting the endorsement of several former candidates that have now dropped out of the race.  The outcome of Super Tuesday could have a market effect in the coming days.

On the virus front the confirmed cases in the US is now over 100 as the fast-spreading illness is now in 10 states.  Fearful consumers, expecting the worst, cleared shelves of long shelf life food products, vitamins & sanitizers with the Governor of Washington suggesting avoidance of public gatherings.  South Korean infections continue to accelerate as more and more countries report newly discovered cases.

The Technical s

The incredibly wild price volatility continues to plague price action making it very challenging and very dangerous except for very experienced traders with a substantial tolerance to risk.  Even with the big move yesterday the Dow remains more than points below its 200-day average and significant level of price resistance at 27,300.  The SP-500 rallied above its 200-day and the QQQ used the 200 as a launchpad but remained below its 50-day average resistance.  Overnight futures were once again very volatile and continue to bounce around significantly this morning.

Action Plan

Traders unable to deal with the extreme price volatility should protect their capital and watch the show from the sidelines.  We are in a day-traders market and we should prepare for news-driven intra-day reversal and large overnight gaps.  Although the market is betting on a huge central bank bailout one has to wonder how effective that will be against a long-term virus threat.  Only time will tell but one thing for sure the fear of this outbreak may be along way from calming down as the spread continues.

Trade Wisely

Doug

Suffering another nasty whipsaw the indexes fell into correction territory with the worst week of selling since Oct. 2008.  We could certainly use some good news to lift the market spirits but as of now there seems to be only bad news as the outbreak continues to spread.  Moody’s now places the offs of a global recession at 40% due to the impact of the outbreak.  As we head into another weekend of uncertainty all we do is hope for the best prepare for the worst.  When this is over there will be some screaming deals on very good stocks, but for now the wise thing to do is protect your capital.

Asian markets close the week with heavy volume selling as a portion of Japan declared a state of emergency.  European markets continue to selloff strongly this morning declining as much as 4%.  After a wild night where the Dow Futures dropped another 500 they have recovered slightly but continue to point to a bearish open.  Hold on tight and expect extreme volatility to continue as we approach the uncertainty of the weekend.

On the Calendar

On the Friday earnings calendar we get a little break with only 70 companies reporting.  Among the notable are FL, SSP & W.

Action Plan

With another huge whipsaw we ended the day selling off more than 1100 Dow points.  In just 6-trading days we have gone from new record highs into full correction with indexes down more than 10% in the worst week since October 2008.  I would love to say the worst of the selloff is over but as we head into the uncertainty of the weekend we could easily see more selling.  Global markets have now erased more than 5 trillion as the virus continues to spread.  Schools in Iran have now been closed and Japan has closed schools for a month with one area of the country declaring a state of emergency.  Moody’s has now raised the chance of a global recession to 40%. 

When you take a look at the index charts it hard to find anything technically traders can base any logical decision as to what comes next.  With panic in full bloom and extreme price volatility trading now is little more than wild speculation and gambling.  During the night Dow futures dropped another 500 points but have since recovered some of those losses currently indicating a gap down.  However, a retest of the overnight lows after the open is not out of the question.  In fact, as we head into the weekend the worry we face is will the low overnight hold? 

Trade Wisely,

Doug

After a will day of volatility where the Dow whipsawed more than 650 points closed the day lower as fear and uncertainty dominate the price action.  Though indexes appear very oversold in the short-term futures indicate another substantial gap lower this morning with the CDC announcing our first community spread incident of the virus.  As much as we all want some selling relief the conditions suggest this could get much worse before it gets better.  Anticipating a bounce with a buy the dip mentality could prove very dangerous in the days ahead.

Asian markets closed mixed overnight with Japan sinking 2% with the South Korean central bank holding rates unchanged.  European markets are decidedly bearish this morning declining more than 2% with the outbreak continuing to spread.  Ahead of our biggest day of earnings reports and a busy economic calendar US Future point to Dow gap down of more than 350 points.  Expect fast price action, news-driven reversals and intra-day whipsaws to continue as we head into the weekend.

On the Calendar

On the Thursday earnings calendar is the biggest day of reports this week with more than 325 companies fessing up.  Notable reports include AMC, BUD, ADSK, BIDU, BBY, BYND, CROX, CRON, DELL, DISCA, EOG, EQT, FLIR, FRO, GCI, GNC, IQ, JCP, JD, KDP, MAIN, MYL, NLSN, NRG, PRGO, RRC, SRE, SWCH, TTD, TD, VMW, WDAY.

Action Plan

Yesterday’s 650 point whipsaw in the Dow shows the market stress as it struggles to come to grips with the virus impacts.  The CDC announced that a woman in California tested positive for the virus and is now the first community spread case in the US.  The news reports on the spread of the virus around the world are becoming increasingly grim as health agencies struggle to inhibit the expansion.  Companies continue to warn of substantial financial impacts and uncertain markets continue to fall.  Where this ends is anyone’s guess but for now price volatility will continue to make trading very challenging and traders should prepare for the fact this could get a lot worse before it gets better.

Technically speaking indexes are oversold but in this situation market fears could continue to drive the markets lower.  I suspect we could soon experience more drawdowns with mutual fund redemptions and 401 plan holders shifting to money markets to protect their capital.  The cascading effect can trap traders trying to buy the dip attempting to anticipate an oversold bounce or relief rally.  It will take a significant time for the daily charts to recover to the point that bullish patterns can appear.  With the high volatility this is a Day Traders market.  Swing and position traders will find this to be very challenging and dangerous.  Remember that cash is positon and just because the market is open you should not be compelled to trade it until conditions improve.  Protect your Capital!

Trade Wisely

Doug

With the CDC warning of a substantial coronavirus breakout in the US markets extended its losses with the Dow sinking more than 1900 points in the just 2-days.  There was such a demand for the relative safety of treasury bond the 10-year yield fell to a record low and oil dropped below $50 a barrel.  What happens next is anyone’s guess as markets around the world grapple with the economic uncertainty of this very contagious outbreak.

Asian markets closed in the red across the board and European markets continue to sell off this morning.  US Futures have been all over the map this morning facing a big day of earnings and economic reports.  With trends and key support levels broken we can expect highly volatile price action to continue as we sort through the wreckage of the last 2-days.

On the Calendar

On the hump day earnings calendar, we have more than 250 companies reporting quarterly results.  Notable reports include LOW, SQ, TDOC, AMCX, APA, BKNG, BOX, CARS, CNVA, CHK, DAKT, EV, ETSY, STAY, TWNK, SJM, KW, LB, MAR, MNST, NTES, NDLS, ODP, PZZA, DOC, SEAS, TJX, TCOM, UPWK, VIPS, WB, WEN & WYND.

Action Plan

After a 2-day selloff that dropped the Dow more than 1900 points triggering more market selloffs around the world.  With the CDC now expecting a substantial breakout to occur in the United States 10-year treasury bonds dropped to their lowest levels in history while oil fell below $50 a barrel.  Travel stocks such as airlines, cruise lines and travel booking company’s plummetted as did health insurers and health care related stocks.  The South Korea outbreak jumped to nearly 1150 confirmed cases and reported 11 deaths.  With possible vaccine’s still months away it would seem this situation will get significantly worse before it gets better.  The uncertainty of the potential economic impacts is likely to keep the market on edge and volatile in the weeks ahead.

With trends broken and prices slicing through multiple price support levels all at once traders will find it very difficult to find there way back into the market with the high risk of news-driven reversals.  During the night US Futures whipsawed from triple points up to triple points down as shellshocked trader’s emotions continue to vacillate.  Normally one would assume we have reached a short-term oversold condition a relief rally is due to begin but this is not a normal situation and traders should prepare for just about anything.  With a huge day of earnings reports and a couple of key economic reports on the calendar expect highly volatile price action to challenge even the most experienced traders.  Remember cash is a position and there is no shame in watching from the sidelines as the uncertainty continues to unfold.

Trade Wisely,

Doug

In one fell swoop virus fears wiped out 2020 market gains with the biggest day of price volatility the market has experienced in a very long time.  Though it may have been an overreaction the growing uncertainty of coming economic impacts is likely to keep the market on edge and price volatility very challenging for the near future.  We should expect very fast price action, news-driven intra-day reversals and whipsaws as the market grapples with not only the virus fall-out but the rising candidacy of Birnie Sanders.

Asian markets closed mixed but mostly lower with Japan plunging more than 3% overnight.  European markets are once again negative across the board after a turbulent day of selling on Monday.  US Futures have been all over the map in the last 12 hours as they try to sort out what comes next.  However, with some positive earning reports the bulls have found some inspiration and currently point to bullish open. 

On the Calendar

On the Tuesday earnings calendar, we have nearly 200 companies fessing up to quarterly results.  Notable reports include SPCE, ALRM, AMRN, AMT, AGR, BGS, BMO, BNS, BCC, CZR, CSGP, CBRL, FRPT, GWPH, HD, TREE, LL, M, MNK, MANU, PLNT, PBPB, PSA, RLGY, RRGB, RHP, CRM, SDC, REAL, TRI, TOL, TUP, WWW & WW.

Action Plan

Yesterday selling wiped out this year’s gains in one fell swoop in reaction to the potential economic impacts of the spreading virus outbreak which has now reached 22 countries.  As the number of infections seems to be in decline in China, outbreaks in Italy, Iran and a rapidly expanding infections in South Korea have investors on edge.  Oil prices fell sharply on Monday as world demand continues to decline with factory closures and massive travel restrictions extend.  Another area hit hard yesterday was the healthcare and insurance sector with investors reacting negatively as Birnie Sanders gains traction in his campaign.  A spreading virus and a socialist agenda combined energized the bears spiking price volatility making a very dangerous trading condition at least for the short-term.

After the bell the futures market tried to bounce back sharply but the pressure of the markets around the world continuing to slip south those early gains eroded during the night.  However, with a big day of earnings reports futures markets are once again trying to rebound now pointing to modest gains at the open.  That said, the pre-market price action is very volatile and traders should prepare for just about anything with a market highly emotional and growing uncertainty.  This is not a market for inexperienced traders!  Even very experienced traders may find today’s price action very challenging with very quick reversals and whipsaws as virus news continues to roll out.  If you do decide to trade it may be wise to consider smaller than normal positions and as always plan your risk carefully.

Trade Wisely,

Doug

The ability to ignore the impacts of the virus impacts shifted to pure panic over the weekend with world markets selling off dramatically.   A common reaction for traders is to join in the panic or assume its an over-reaction and rush in to buy the dip.  Today we should expect violent whipsaws in the stock and index prices, creating very dangerous conditions for even the most experienced traders.  The emotional price swings may not respect price support and resistance levels.  Stay calm, protect your capital and avoid revenge trading.

Asian markets closed down across the board overnight and European markets are sharply lower with the outbreak spreading across Italy.  Although we have a big day of earnings reports the market has now turned its attention to economic impacts and the fear of its rapid spread around the world.  Today is a day to exercise discipline, follow your rules, staying calm and focused on avoiding emotional-charged decisions.

On the Calendar

On the Monday earnings calendar, we have more than 130 companies reporting quarterly results.  Notable earnings include AWR, CTB, DDS, DIN, EPR, HTZ, HPQ, INTU, KTOS, OKE, PANW, APTS, RCII, SHAK, & THC.

Action Plan

Friday’s price action raised red flags as the bears became more aggressive, heading into the uncertainty of the weekend.  Warning signs continue to grow as safe haven plays such as GLS, SLV, XLU & defensive sector stocks rallied sharply.  With news over the weekend that the virus outbreak has spread to 22 countries, fear has quickly shifted to panic overnight as world markets drop dramatically.  With oil demand continuing to fall, there is speculation that per barrel oil prices could quickly decline sharply lower.  During the night, Dow futures fell more than 800 points but are currently trying to bounce off of those lows though continue to point to painful losses this morning. 

Although I sounded like a broken record with daily warnings to not over-trade such an extended market. A market that was choosing to ignore economic impacts turned out to have been the right thing to do.  Today will be a very emotional market reaction and a very dangerous day of violent price action and high volatility.  Try not to panic and avoid emotional-based decisions.  Expect substantial intra-day whipsaws in the market that may not hold at support and resistance levels.  This kind of panic environment is dangerous to trade for even the most experienced traders.  Protecting your capital is the best course of action and don’t get caught up in the buy the dip crowd or revenge trading because the impact of this outbreak is likely to be far-reaching.

Trade Wisely,

Doug

With an ugly whipsaw in price action, the bears reminded us yesterday they are still here, and like it or not, this rally will not go up forever.  A rude awakening for traders overtrading or chasing already extended stocks.  Overnight we learned of outbreaks in China prison populations, South Korea and Iran, while Japan extended business closures.  As we head into the weekend, it will be interesting to see if the uncertainty will bring out the profit-takers or if bulls will continue to buy despite the economic warnings.  No matter which side wins the day, I suspect price volatility will add significant complexity to the decisions ahead.

With new outbreaks in both men and women prison populations, Asian markets closed the week mixed but mostly lower.  European markets are improving as the morning goes on but are modestly in the red across the board.  US Futures are also coming off morning lows ahead of economic and earnings reports but continue to point to a modestly bearish open.  Plan your rick into the uncertainty of the weekend very carefully as the economic impacts continue to grow.

On the Calendar

On the Friday earnings calendar, we get a little break with less than 60 companies reporting quarterly results.  Notable reports include B, CNK, DE, ERF, MGA, RY & WPC.

Action Plan

A wild day of price action yesterday gapping lower on after a warning from Goldman but quickly rallying back up to price resistance.  After banging against the resistance several times, the bears launched a strong attack with the Dow plunging more than 300 points, then reversing once again trimming losses to just 128 Dow points.  A guy could get whiplash with that kind of price action!  During the night virus fears seemed to grow as Japan extended business closures and outbreaks expanded in South Korea and Iran.  Hundreds of new confirmed cases were reported in China last night with an outbreak in prison populations of both men and women. 

The big recovery yesterday left behind a bunch of Hammer Candle Patterns at or near price support levels, likely adding hope of a rally for today.  Unfortunately, fears of new outbreaks have markets around the world under some selling pressure this morning.  It will be interesting to see if the uncertainty of the weekend will inspire the bears to reengage or if the bulls will continue to have the willingness to ignore the future economic impacts.  Although redundant, I will continue to warn about overtrading and to plan your risk carefully heading into the weekend.  Yesterday’s wild price action may have been a warning shot over the bow that more volatility is close at hand.

Trade Wisely,

Doug

The SP-500 and Nasdaq break through the clouds of uncertainty printing new records while the Dow and Russell close just below key resistance levels.  As the bulls relentlessly power forward, China’s Hubei province extends business closures to March 11 and the Commerce Ministry warns of long-term impacts on labor-intensive industries such as manufacturing and food production.  Goldman has now added a warning stating a “short-term correction is looking much more probable.”  We will soon find out what the bulls think of that these warnings.

Asian markets closed flat to mostly lower overnight, and the European markets are modestly lower or near the flatline this morning.  US Futures ahead of the biggest day of earnings reports this week point to a slightly lower open this morning.  If all the warnings help the bear engage, watch for an increase in price volatility.  However, I would not expect the bulls to give up easily as they work to extend this amazing run. 

On the Calendar

On the Thursday earnings calendar, we have our biggest day this week, with more than 230 companies fessing up to results. Notable reports include AAN, AKS, AEP, BTD, COG, CLF, ED, CVA, DPZ, DBX, EHTH, ENV, EQM, FSLR, GLPI, GIL, HFC, HRL, I, LAMR, NCLH, PPC, RMAX, SIX, SO, SFM, TXRH, TRUE, OLED, VTR, VIAC, & WIX.

Action Plan

With a mighty bullish push, the SP-500 and the Nasdaq put new record highs in the books.  Absolute Breadth Index continues to decline, indicating fewer and fewer companies are supporting the extended rally.  Last night Goldman chimed in on the virus economic concerns saying, the market has underestimated the coronavirus impacts with the current stock prices.  “While a sustained bear market does not look likely, a near-term correction looking much more probable,” according to Peter Oppenheimer.  China’s Hubei province has once again extended business closures to March 11^th as they continue to battle to contain the virus spread.  The Commerce Ministry in China also warned of possible long-term impacts on key sectors such as labor-intensive industries.

While the SPY and QQQ broke out of the clouds to blue skies yesterday, the DIA and IWM closed the day just below key resistance levels.  Trends remain very bullish, and there seems to be no price too high on several tech giants as buyers continue to snap them up despite warnings and parabolic price patterns.  Traders should guard themselves from overtrading and chasing extended stock prices well above price supports.  Ahead of a big day of earnings and economic reports, US Futures appear slightly more cautious this morning after the Goldman warning. 

Trade Wisely,

Doug

Virus, we don’t care about no stinking virus!  After AAPL warned of substantial impacts creating a selloff, the bulls seem to have regained control as even AAPL rallied by the end of the day.  China’s media censorship has mainstream news outlets like CNBC questioning the validity of reports out of the region as three Wall Street Journal reporters were expelled from the country today.  No price seems to high for some tech companies as the push for record highs continues.  Don’t bother us with warnings; we want a 30,000 Dow!

Asian markets closed mixed but mostly higher overnight, and European markets are green across the board this morning.  US Futures opened bullish last night and stayed the way all night currently pointing to a bullish open ahead of a big day of earnings reports and the release of the FOMC minutes at 2 PM Eastern today.  Continue to expect news-driven reversals and the possibility of big overnight gaps as the outbreak uncertainty warnings continue to come out despite the willingness of the market to ignore them.

On the Calendar

On the Hump Day earnings calendar, we have a big day with nearly 190 companies reporting.  Notable reports include SAM, ALB, CAR, BHC, ARPN, FUN, CAKE, CDE, DISH, ET, ETR, FVRR, FOSL, GRMN, GPC, HST, H, NTES, OC, PXD, O, STMP, VIPS, WMB, & ZG.

Action Plan

After a selling pullback after AAPL warned of substantial virus impacts, the bulls seemed to regain control by the close.  Even AAPL itself rallied by the end of the day as the bulls choose to ignore company warnings.  Jaguar and Land Rover said they only have about 2-weeks of parts left, and Adidas warned this morning that their business activity in China dropped 85%.  With confirmed cases continuing to rise, futures markets have traded in the green all night long.  Three Wall Street Journal reports have been expelled from Chiana as the government censorship of the news clamps down tighter to control the narrative. 

If the market wants to ignore and push higher all, we can do as traders is to continue to follow the price action.  However, we should be very careful not to over-trade and take profits quicker because of the possibility of large morning gaps, and news-driven reversal risk remains very high.  Several big tech stocks have moved into parabolic patterns as it seems traders have decided that no price is too high to pay for market leaders.  A condition that’s very reminiscent of the tech run-up in 1999.  Choose your trades wisely and avoid chasing stocks at or near resistance or those already several days up in their current run. 

Trade Wisely,

Doug