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Market Update

Market Update

March 13, 2020

No Non Sense News

Today is Friday, March 13 and it is 9 AM.

As I sit hear writing today’s update, I see that Dow Futures are limit up pre market. Yesterday was the single largest point decline in Dow History and the 4th largest percentage decline in history only exceeded by the 1929 Crash and 1987’s Black Monday. I experienced Black Monday first hand and the concern then was that the financial markets were literally going to implode completely, shut down and not open for a considerable period of time. Let me say that I do not see anything close to that happening at this point in time.

We have been hit by 2 unforeseen significant events. Corona virus pandemic and a once in a lifetime supply surge in the oil markets thereby collapsing oil prices. This one two punch has put an end to the longest bull market in history. Virtually everything has been hit including so called safe havens of Gold and Silver.

Volatility, which I view as somewhat of a fear indicator, exploded higher, to levels not seen since the 2008 financial collapse. However, this time the velocity was far faster.

The Fed stepped in to try to stem the selling in the afternoon by offering a $1.5 Trillion dollar credit facility to banks. However, that was a short term band aid which the market appeared to shrug off as the selling continued into the close yesterday. The Dow has now retraced 100% of the Dec 2018 to Feb 2020 peak rally.

So now the market will bounce and everyone is wondering, how high and is the worst over yet.

The answer to this will be determined by institutions and their willingness to begin buying again. No one can say with certainty if we are at the bottom yet. I do know that a 30% drop in roughly 2 ½ weeks is unprecedented. The speed at which negative news spreads today and is translated into the market is far faster than any time in history. We will see if a 30% correction is enough for institutions to begin to buy again.

As always, if anyone has any questions or concerns, please give us a call. We are here and available to help.

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