Panic Trading Dominates S&P 500 (SPX)
Traded volumes of the March E-mini S&P 500 have been titanic, already over 2.9 million. The action has generated heavy pricing volatility.
For the fourth day this week, coronavirus fears have equities players limiting exposure. At the halfway point of the U.S. session, the DJIA DOW (-307), S&P 500 SPX (-32), and NASDAQ (-115) are once again hemorrhaging market share. However, values are well off intraday lows as some bargain hunters have begun hitting the bid.
On the coronavirus front, the first non-sourced U.S. case has been confirmed. A resident of Northern California has been diagnosed with COVID-19. At this point, how the virus was contracted is not known, as are the potential breakout implications.
On the economic news front, U.S. GDP came in on schedule during the pre-market hours. Here’s a quick look at the high points:
Event Actual Projected Previous
GDP Annualized (Q4) 2.1% 2.1% 2.1%
GDP Price Index (Q4) 1.3% 1.4% 1.5%
Non-Defense Capital Goods Orders (Jan.) 1.1% 0.1% -0.5%
The key figure from this group of metrics is the lagging GDP Price Index (Q4). The number came in below projections and expectations ― more fuel for the FED rate cut fire.
For now, the S&P 500 is taking a break from the steep downtrend of the past six sessions. Prices are on the rise and have pared intraday losses.
S&P 500 Rallies From Session Lows
At one point this morning, the S&P 500 was off more than 3%. As of this writing (about 1:00 PM EST), the losses have been cut by ⅔, with bidders entering the market just above 3000.00.
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For the March E-mini S&Ps, there a few levels to watch moving into Friday’s trade:
- Resistance(1): Weekly SMA, 3105.25
- Support(1): Psychological Barrier, 3000.00
Bottom Line: Traded volumes of the March E-mini S&P 500 have been titanic, already over 2.9 million. The heavy action has generated incredible volatility and swings in price action. Until proven otherwise, a short side bias is appropriate.
However, if we see a hard test of 3000.00, a buying opportunity will come into play. Until elected, I will have buy orders in the queue from 3000.75. With an initial stop loss at 2994.75, this trade produces a fast 24 ticks on a 1:1 risk vs reward ratio.
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