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Market-at-a-Glance - 3/26/2020
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By:
Christopher Mistal
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March 26, 2020
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3/26/2020: Dow 22552.17 | S&P 2630.07 | NASDAQ 7797.54 | Russell 2K 1180.32 | NYSE 10536.28 | Value Line Arith 4700.09
Fundamental: Uncertain. That may be just be the best and perhaps most honest assessment that could be given at this time. Weekly initial jobless claims exploded to nearly 3.3 million and likely would have been even higher if states did not run into processing capacity limitations. Millions of businesses are shut or operating well below desired levels. The virus is still spreading rapidly around the globe. If containment or some semblance of control can be achieved quickly, then, maybe the recovery could also come quickly.
Technical: Bear bounce? Historically key levels such as 50- and 200-day moving averages were quickly violated and even the 20% decline threshold that is typically associated with a bear market has been exceeded. Technical indicators, like MACD quickly reached oversold levels and when selling dried up earlier this week a bounce has ensued. Historically, lows are typically tested and the current lows have not yet been.
Monetary: 0 – 0.25%. March’s scheduled Fed meeting was no longer needed as they sprung to action well before. The result as of today is the return of ZIRP (zero interest rate policy). Rates have been cut to effectively zero and open-ended purchases of Treasuries and mortgage-backed securities are underway. The Fed has also restarted many of the programs it first used in the financial crisis and appears to be looking to create some new ones as well. The Fed appears to be “all in” but they insist there is still more that could be done, if needed. Hopefully, more will not be needed.
Seasonal: Bullish. April is DJIA’s best performing month since 1950, second best for S&P and fourth best for NASDAQ (since 1971). However, April also marks the end of our “Best Six Months” for DJIA and the S&P 500. Our Seasonal MACD Sell signal can occur as early as April 1 but could easily be delayed should the market continue to recover through April and beyond.
Psychological: Bearish. According to
Investor’s Intelligence Advisors Sentiment survey Bullish advisors are at 30.1%. Correction advisors are at 28.2% and Bearish advisors are 41.7%. This is the highest number of bears since October 2011. Historically, bears outnumbering bulls has coincided with better opportunities to accumulate long positions. However, the exact timing has not been perfect.