A Technical Look at the Market Sell-Off Thus Far
In the last week, institutional sellers have hit the market. And that’s a major development.
For the last six months, stocks have gradually grinded higher with every dip being both small in size and aggressively bought. This was a clear signal that institutions were on the sidelines.
That is no longer the case. The overwhelming selling pressure of the last few days has been the product of institutions selling in a big way.
The S&P 500 has smashed through multiple lines of support. As I write this, it is hanging by a thread to support around 3,120. If this goes, we could easily do a final flush to 3,025.
That 3,025 mark is right around the 50-week moving average, which has acted as a magnet for sell-offs during the last few years.
Many clients are now asking us… Is the bull market over?
Incredible Buying is Coming
Consider that the economy continues to grow and the Fed continues to ease. Unless one of those two things change, then this is a terrific buying opportunity just as it was throughout 2019.
But what about the coronavirus?
During the Ebola scare of 2014, stocks dropped 7%. They then staged a V-shaped recovery and ROARED higher.
During the SARS scare of 2003, stocks fell 14%. And just like with Ebola, stocks then staged a V-shaped recovery and ROARED higher.
As I write this today, stocks are already down over 8%.
Is coronavirus worse than Ebola or SARS? I have no idea.
But unless it’s EXPONENTIALLY worse, stocks should be bottoming soon.
After all, what are the odds President Trump is going to let his beloved stock market go down the toilet during an election year?
Editor, Money & Crisis