What a crazy last 3 days! Wednesday the Fed took centre stage of the markets and though it seemed we were off to the races with the market bouncing as much as +200 Dow points post Fed Powell’s statement, after which Facebook CEO Mark Zuckerberg finally broke his silence and had a much-anticipated chance to elaborate on the negativity surrounding Facebook’s data breach – the gains for the day were dissolved.
Thursday seemed to be a day when investors and traders finally began to question President Trump’s stability, as it now appears that the tariffs are punishing the US vs its intention of offsetting the US deficit with China. By the close, we were down over -700 Dow points.
Friday was a toss up, from us being up on the day to unchanged to back up, and then President Trump decided to speak about the signing of the omnibus spending bill, which looked to be great for the markets. Before we knew it, two hours before the close the selling came in and we closed down -424 Dow points.
Wednesday afternoon we were just under Dow 25,000 and now we stand 165 Dow points from the 200-day moving average. Recall that with the lows reached in February that we hit like a springboard, it was time to buy! Talking heads on CNBC are saying that things are going to get worse before they get better as they disclose their short positions – there is no bias there at all (sarcasm)!
This market is incredibly oversold and we could easily see more selling, though logic dictates that we are due for a bounce. Of how much and to where? Honestly, we have no idea, if we had to say, we would either hit the 200-day moving average and bounce, or head down to strong support at Dow 23,250 and bounce. If we close below that to end March next week, we could see another -1000 Dow point drop to around 22,400 where again strong support lies.
Using my mother’s words that have never led me astray in life, ‘look for value!’ We shall do exactly that! Protect your portfolio and may those hedges hit to allow for principal protection, capital appreciation, and share accumulation!