Equities Hammered in Coronavirus Bull Trap Sea of Red

Mish

Stocks are hammered across the board today in a coronavirus-related sea of red.

Yesterday's rally into the close on Amazon earnings is now a huge confirmed bull trap.

As I type, we are heading into the close. And it looks ugly.

Equity Numbers

  • S&P 500 Futures: -67 Down 2.04%
  • Nasdaq Futures: -219 Down 2.37%
  • Dow: -592 Down 2.05%
  • Dollar Index: -0.486 Down 0.50%

The US dollar index is at 97.220. Frequently, if not in fact normally, the dollar rallies in time of international turmoil.

Not this time. The US dollar top may be in.

On Sunday evening I commented US Futures Poised to Gap Down on Coronavirus Scare: What Then?

Some of the "What Then?" question has been answered. This was my comment Sunday evening:

Best Bear Case

The best bear case is if this gap down fills quickly then the market collapses as soon as it does.

Right now, that appears to be what is happening.

Meanwhile, mind those gaps. We remain in a very bearish setup. Yesterday I commented, Mind the Gap, It Closed Bearishly On Wednesday

Gaps remain but they are all lower. See the above link for details.

Mike "Mish" Shedlock

Comments (12)
No. 1-7
Casual_Observer
Casual_Observer

This will likely decelerate GDP under 1%. The extent of the economic damage wont be known until the extent of nCoV is known.

njbr
njbr

The GDP result was already pretty bearish--saved only by considering inflation at 1.5%.

But hey, it's just a flesh wound...

No effect! No effect! You're the effect!

ksdude69
ksdude69

There are lots of gaps lower and they will be areas of support, not sure how much if this gets going possible bounces and fall right through. It could be a spectacular watershed moment. The slow grind down could be seriously hastened with variables like carnovirus that the Fed can't do anything about.

TheLege
TheLege

The market is up over400% from its GFC lows and were down 2% now on a global pandemic and this is ‘ugly’ ?

Wake me up when stocks are 30% down. At least. Trump will be doing his nut - so that should be entertaining too.

BaronAsh
BaronAsh

Stocks took a bit of a hit, but nothing unusual. Step back to a weekly chart and hasn't even corrected back to last high that was broken through during this last move beginning in early November. Also, this week's bar wasn't especially large, especially given that sell-off bars tend to be larger (and bear legs of less duration in a bull market).

In any case, a long way to go until we can tell if this is anything other than a typical down leg correction. By my reckoning, it needs to go below the thick red line (Point of Control but also last convincing Swing Low) and stay below for any sort of substantive Bear case to be made.

But waddoo I know?

TumblingDice
TumblingDice

The market was trading at all time highs. Is this the blow-off top?
I stick with dividend paying blue-chips.
I bought Coca Cola (KO) in two purchases in Dec 2012 and Jan 2013 at an average price of $37.08, Coca Cola was paying dividend of $1.02 (2.7%).
Here are the Dec 31 closing prices for these years: ['13, {$41.31}, '14, {42.22},
'15, {42.96}, '16,{41.96}, '17, {45.90}, '18, {47.35},
'19, {55.35} ].

Today's close was $58.40. Current dividend is $1.60 (4.3% return on my initial investment). Coca Cola raises its dividend annually for like the last 56 years.

Escierto
Escierto

Gold climbed to near $1590 but the mining stocks are languishing. Gold is headed back down once the hysteria subsides.


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