Hopes were high Friday morning that buyers would be able to produce some sustained momentum and put together two consecutive days of gains for the first time since Feb. 12. But the bounce fizzled fast.
There was steady selling the rest of the day concluding with a close near the lows. One bright spot was some relative strength in small-caps and breadth wasn't terrible, with around 3,300 gainers to 4,275 decliners.
More significantly, the S&P 500 closed at the low of the day and is now hitting the same levels it was at back in February 2017. That is over three years of gains wiped out in less than a month. That is the fastest collapse since the Great Depression in the 1920s.
All week long market players were hoping to catch some sort of oversold bounce. There were a few good stabs to the upside but nothing was sustained. The bullish thesis was that the massive monetary and fiscal stimulus would deliver at least a temporary respite.
In a more normal environment, selling of this intensity would price in whatever the negatives are causing the pressure. However, we are living through a crisis like none we have experienced before. The economy is being shut down in an unprecedented way and there is still no great clarity about the spread of the coronavirus. The ultimate damage is unknown and that is why the market can't find support.
Many market players keep hoping that the worst is now being discounted but, while that may be the case intellectually, it is not the case emotionally. Most people are still grappling with the reality of what is occurring and don't have any idea how it is going to affect not only them personally, but the rest of the world.
My best advice remains the same. Avoid the temptation to try to predict when this market will hit low. High levels of cash are the best position right now. When this selling does come to an end, we will have weeks and months to do some buying as a new bull market develops. The most important thing right now is to try not to lose money.
Have a great weekend and stay safe. I'll see you back here on Monday.