Although SPY (SPY) did not hit a new low today, iShares Russell 2000 ETF (IWM) did. The S&P 500 futures did hit a new low after hours last night, so it's not a completely different story. These are the types of reversals we want to see to feel as though a low is being put into place. It's far to early to call it THE low, and we haven't even finished the day, so it's anyone's guess as to whether it will hold, but it is a decent setup even for a Friday.
And being Friday, you're going to hear about markets not making a bottom on Fridays. Unfortunately, I don't think many past rules apply to the current environment. A positive development of the past two days is it provides some measure of a stop if you begin to dip your toes long as I mentioned yesterday. I think it is time to consider. In short, I think it is time to start buying with an index stop of 3% to 5% in mind.
Today won't be without risk in the last hour. President Trump is going to address the Coronavirus at 3 pm DST. Murmurs of testing results for the president and vice president have made the rounds that some announcement will be made about test results for both men. Whether that is the case, we'll have to wait and see. We did see a dip shortly after the announcement of the press conference, so it's possible we already saw a test of bad news. This reinforces the idea of using today's lows as stop considerations.
I'm still in the don't force it mode and don't do anything that will result in a loss of sleep. There's no need to be a hero. I'm still not sure a bottom is in play in the market yet, but I do feel like we have the setup for a bounce. We're getting much-needed selling in Treasuries and gold, while the VIX is finally letting off some steam although I don't think a 65 value will bring comfort to many traders.
I haven't seen much chatter around cryptocurrency lately, but virtually the entire lot of coins experienced its own spectacular crash. A week ago, Bitcoin traded above $9000. Last night, it briefly touched $4000. Over the past week, the crypto bellwether has lost over 40% of its value. Ironically, crypto is making equities look good. The argument Bitcoin is a safe haven against the stock market may be dead for good. Some are pronouncing it the end of crypto. I'm not ready to buy into that argument, but the recent drop certainly damages the appeal of cryptocurrency as a viable alternative to equities in the event of a major disruption in the stock market. When it comes to liquidity, people will get it wherever they can get it. Treasuries, gold, stock, and, yes, even Bitcoin.