Market Direction Mid Week: Bearish Territory

The trading strategy this website uses as its signature tool is our bullish and bearish alerts. This indicator has effectively been used with accuracy since 2011. The website helps our followers stay in tune with the stock market and profits have been amazing. This post provides a mid-week update on how the stock market has preform. At the bottom of this post are the all-time numbers since the current alert was made. The current bullish alert is moving in the right direction.

Market Direction: BEARISH alert issued 2/27/2020

 

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U.S. stock futures fell late Wednesday, after President Donald Trump’s addressed the nation following another steep selloff on Wall Street that snapped a more-than-decade-long bull market for the Dow.

The president spoke live from the Oval Office at 9 p.m. Eastern, and detailed plans on how the government is addressing the spreading coronavirus outbreak, including economic stimulus plans. Most notably, Trump said all travel between the U.S. and Europe will be suspended for 30 days, beginning Friday.

What are markets doing?

Dow Jones Industrial Average futures YMH20, -3.478% were about flat before the address, but tumbled more than 500 points, or 2% immediately after Trump spoke, while S&P 500 futures ESH20, -3.231% and Nasdaq-100 futures NQH20, -3.580% fell around 2% as well.

Earlier, the Dow DJIA, -5.85% plunged 1,464.94 points, or 5.9%, to close at 23,553.22, marking a bear market, widely defined as a drop of at least 20% from a recent record intraday peak. That ended the blue-chip gauge’s 11-year bull-market run.

Read: The Dow just tumbled into a bear market — here’s how long those downturns last on average

The S&P 500 SPX, -4.88% fell 140.85 points, or 4.9%, to close at 2,741.38. The Nasdaq Composite COMP, -4.70% tumbled 392.20 points, or 4.7%, to end at 7,952.05.

Bear-market numbers loomed for those two indexes as well. The S&P 500 will fall into a bear market if it closes below 2,708.92 — a little over 32 points — while the Nasdaq will do so if it closes under 7,853.74, about 98 points lower than Wednesday’s close.

What was driving markets?

Futures trading was muted ahead of Trump’s address, but started to fall after he announced the travel suspension. Trump also promised financial relief “for workers who are ill, quarantined or caring for others due to coronavirus.”

The president also said the Small Business Administration will make emergency low-interest loans available to affected businesses, and said the government will defer tax payments for certain individuals and companies for three months.

Stocks fell Wednesday after U.S. Treasury Secretary Steven Mnuchin said a robust economic stimulus plan would take a a while to get through Congress, while he backed plans to help small businesses. On Capitol Hill, Trump’s proposal to cut payroll taxes was met with skepticism from both parties.

Meanwhile, the World Health Organization on Wednesday declared the coronavirus outbreak a global pandemic, as governments from Italy to California imposed bans on public gatherings in an effort to slow the illness’s spread.

What are analysts saying?

“Even in the best-case scenario it will take time for spending to return to normal,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note. “We remain firmly of the view that a sustained market recovery cannot begin until the number of new cases clearly has peaked, but that’s probably several weeks away. In the meantime, the numbers likely will get substantially worse.”

How were other markets trading?

After bouncing back Tuesday, crude oil fell again Wednesday, though picked up again in late electronic trading. West Texas Intermediate crude for April delivery CLJ20, -3.366% was last up 1% at $33.32 a barrel, while May Brent crude BRNK20, -2.794% , the global benchmark, was about flat at $35.84 a barrel.

In Australia, the S&P/ASX 200 XJO, -2.71% fell into bear-market territory during Wednesday trading, and fell nearly 2% more when it reopened Thursday.

Read Next

The Dow just tumbled into a bear market — here’s how long those downturns last on average

It’s the end of a bullish era for the stock market and the beginning of a new phase of bearishness, after a sharp plunge for risk assets on Wednesday pushed the Dow Jones Industrial Average into bear-market territory for the first time in more than a decade.

More On MarketWatch

·         Dow ends in bear-market territory after WHO declares coronavirus a pandemic while market looks for fiscal stimulus

·         Chart of Wall Street’s ‘fear’ index in 2020 illustrates how unhinged stock markets have been over coronavirus compared to the 2008 crisis

·         It’s still way too soon to buy stocks, warns Deutsche Bank’s Torsten Slok

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The all-time lows since our initial recommendation to go SHORT this market. Here is how the markets have performed:

Stock Market Direction Recommendation (2/27/2020)
Dow	down 2,434.62 points a 9.45% gain	3/11/20
Nasdaq	down 713.05 points a 8.32% gain	3/11/20
S&P 500	down 246.48 points a 8.27% gain	3/11/20

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