After a 2 day bounce that ended last Wednesday, the Covid-19 induced correction picked up right where it left off. The surprising news of an oil price war by Saudi Arabia caused a breathtaking waterfall across the entire equity complex, and slammed the main indexes through their Feb 28th lows ending the nascent rally attempt. The Dow Jones Industrial average recorded its first 2000+ (2K) point loss on a single day in history.
Our Current Market Outlook remains “Market in a Correction” with a “red” light. One of our Core Four indicators is now green reflecting the massive oversold condition in the indexes. The Put/Call Ratio recorded its 2nd consecutive close over 1.15; an area which historically suggests a tradeable rally (aka. bounce) is likely within 1-4 days.
The P/C Ratio signaled this a week ago too, but it’s been our long tenured observation that first rally attempts usually fail. Perhaps a short-term bottom is nearer this time.
In our February 24th blogs we asked if the coronavirus could lead to a recession in the US. Now, with the double whammy of the Saudi action, it appears one will be unavoidable. That’s what the bond market had been saying. (See here) Now the stock market is finally seeing it too.
As of Fridays close, the levels of money market/fixed income holdings in our 5 strategies were at 61%, 68%, 70%, 84% and 100%. We praise God for that!
While the technical damage sustained over the past three weeks will take time to repair, conditions are such that a new rally attempt may develop at any time. But remember, if one does it is a process of several days and must reveal specific technical action before it will be considered a confirmed rally.
What can investors do now? Expect an oversold rally soon. Study the quality of the internals during that bounce to discern the footprints of big money. Watch for a surprise announcement by the President or Congress in an attempt to encourage investors and support the market.
Have a Triumphant day! ®
The information in this article is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Not to be used as legal or tax advice. ©2020 Triumphant Portfolio Management, LLC.
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