Despite very aggressive moves by the Fed to shore up credit markets and provide confidence that the financial system is on solid ground, fear and uncertainty about the coronavirus kept the buyers on the sidelines as trapped longs sold into a black hole.
The percentage loss today was the biggest since the crash of 1987. The DJIA lost nearly 3,000 points with a drop of almost 13%. Breadth was almost 10 to 1 negative. There was a little bounce in gold but other than that there were very places to hide.
There were only 76 stocks at 12-month highs -- mostly inverse ETFs -- while there were a whopping 4,850 stocks making new 12-month lows. Less than 2% of stocks are over their 40-day simple moving averages.
While the market is obviously stretched to the downside and grossly oversold, there continues to be one huge obstacle to relief: there is no clarity about the coronavirus. At a late-day press conference, President Trump mentioned we may be fighting the coronavirus into August and that a recession was a possibility. That isn't surprising but many market players have not fully embraced these negatives.
As I discussed in my opening post, this market is all about emotion right now. Technicals and fundamentals don't matter. There is fear in the air since there is so much uncertainty.
The only logical way to deal with this is to stay out of the way until things calm down. Resist the urge to do something aggressive just because the market is so volatile. Big swings should make you less active rather than more active unless you are a day trader.
While this action is some of the worst I've ever seen, I'm maintaining a very positive mindset about what lies down the road. We just have to wait for it and avoid the temptation to act prematurely.
Have a good evening. I'll see you Tuesday.