Market Context

Good Saturday to all,

Blood in the water and streets is really the only way one can come close to express the sentiment in the markets this past week. In all honesty, it was a tough one to gauge. A British nobleman in the 18th century stated: “The time to buy is when there is blood in the streets.” The quote has an immaculate track record of being right. Back in 2008 during the Lehman Brothers fiasco we saw the markets decline -18.55%, this past week was -12.36% for those invested it really is all about perspective, take a deep breath, zoom out of a daily or weekly chart. Investors and traders alike have been spoiled by the relentless strength of this bull run and in my humble opinion, we are not done.

In the blog post dated January 11th, 2020, I said: “Even the talking heads on CNBC and those alike leave me to be on the lookout for a surprise move to the downside.” and to “Keep your eyes open as this market may have a few surprises in store for us”. Here we are closing out an extended February (leap year) and as the Coronavirus (Covid-19) looms we have seen a rapid decline in the markets. As the markets were set to close this past week, reports that the Trump administration was considering issuing tax cuts, pressuring the Fed to cut rates ran across headlines and the markets saw a solid bounce.

So is that it? We are golden and the bulls are back in charge? In my humble opinion not quite, there are still rising cases of Covid-19 and no formal panacea. The key takeaway is for investors and traders to tread carefully and remember that in the game of financial markets, it is a marathon, not a sprint. While we could easily see new lows in this market, once a remedy is found and the dust settles the market is going to bounce hard, so as price action stands at this point and time it is viewed as a buying opportunity.