U.S. Markets Can’t Stop The Bleeding

At this point, stock market fundamentals and expected FED quantitative easing are playing second-fiddle to momentum algorithms.

Written by: Dime Levov • Friday, February 28, 2020 • 2 min read

• Last updated: Friday, February 28, 2020

The lead story in finance continues to be the coronavirus-led meltdown in the global equities markets. On the U.S. side of the ledger, selling has defined another session and extended weekly lows. A little over halfway through the Wall Street trading day, the DJIA DOW (-485), S&P 500 SPX (-40), and NASDAQ (-45) are once again deep into the red. Following the record daily losses of Thursday, it has been a “no-quarter Friday” for American stocks.

Aside from coronavirus headlines, there were a few economic numbers out during today’s pre-market. Here is a quick look at the highlights:

Event Actual Projected Previous

Core Personal Consumption (MoM, Jan.) 0.1% 0.2% 0.2%

Personal Consumption (MoM, Jan.) 1.7% 1.7% 1.5%

Personal Income (MoM, Jan.) 0.6% 0.3% 0.1%

Michigan Consumer Sentiment Index (Feb.) 101.0 100.9 100.9

All in all, today’s numbers for the U.S. economy were fairly strong. Consumption remained steady, with a slight uptick in personal income and consumer sentiment. This is another solid set of figures that is taking a back seat to coronavirus hysteria. At least for the time being, the markets are choosing to price in the worst-case NOVID-19 scenario in favor of decent fundamentals.

Also, it looks like the heightened chance of FED rate cuts are being ignored. Currently, market fundamentals and quantitative easing are playing second-fiddle to momentum algorithms.

U.S. Markets Continue To Fall, Equities Enter Correction

A stock market correction is defined as being a 10%-20% pullback from a periodic high. The negative price action of the past week has sent the U.S. indices officially into correction.

March E-mini S&P 500 Futures (ES), Daily Chart

Overview: In a Live Market Update from Thursday, I issued a long scalping recommendation from just above 3000.00 in March E-mini S&P 500 futures. The trade was a miserable failure, losing a quick 24 ticks. The 3000 psychological barrier was instantly swept off the board, paving the way for an epic late-day selloff.

At press time, the indices are well off the intrasession lows. However, this was the case yesterday ― values rallied before they plunged. Sentiment continues to be extremely negative and it will be a surprise to see anyone going home long stocks over the weekend. Until we see some hard evidence of bearish trend exhaustion, any buys in the S&P 500 are extremely high risk.