A huge day for the stock market entering the week as traders and investors alike are adjusting after last week’s wild ride. Friday’s session certainly appeared as if we saw capitulation at least in the near term. Given the massive volume on Friday and where the session ended it does appear a key pivot point has been reached. This does not mean we are automatically heading back to all-time highs. The NASDAQ has done a nice job bouncing off its 200-day moving average. While volume did decrease from Friday’s massive number, we did see volume well above its 50-day average. There is a lot more work to be down for this market to have upside potential. Best to keep patient and await opportunities when the odds are in our favor. There is no need to panic buy or sell. Too many traders are overly emotional when it comes to trading. Do not be one of them. Stay patient, stay the course, and stick with Big Wave Trading.
An interesting development is in the Bond market. 10-year Treasuries yield just 1.13%. Not inspiring one bit, but the fact the Fed has been well-behind the curve. Fed Funds sit at 1.75% while the 2-year note yields .86%. The bond market is certainly sniffing something out, whether it is nefarious or otherwise remains to be seen. We are not surprised to see the Fed so far behind the Bond market. It is par for the course for the Central Bank. At its March meeting (3/18/2020) it would not come as a surprise if we see a 50bps cut. Now, the Coronavirus situation may change, and rates may tell a different story in a few weeks. We cannot predict the future, nor do we try, and trade based upon a hunch of what the future might be. We’ll trade what is in front of us and not what we think the market should be.
There is a lot of work to be done by this market. We expect volatility to continue for the time-being, but it remains to be seen. Stay the course and remain patient.
