EB Daily Market Report - Wednesday, March 11, 2020

I will be out nearly all day today, but I wanted give you a quick rundown of market happenings in early action today. All of our major indices opened considerably lower once again. We're roughly 25 minutes into the day as I write this and the Dow Jones, S&P 500, and NASDAQ are down 3.05%, 2.73%, and 2.41%, respectively. So we are seeing a bit of outperformance by the more aggressive NASDAQ, which is certainly more bullish than the alternative. Still, prices are lower.  And small caps and mid caps are underperforming again.

As I look at the S&P 500, the price low from Monday and Tuesday was 2734. The low on March 8, 2019 was 2722 and the low on June 3, 2019 was 2728. That's a lot of price support in a 12 point range. If we lose that on an intraday basis, another big bout of impulsive selling could be upon us. The next MAJOR support level would be near 2350. I don't believe we'll go there, but literally ANYTHING is possible when we have a VIX in the 50s.

Personally, I'm using the extreme pessimism to build positions mostly in the SPY and QQQ. I am hand selecting a few top quality names from our Strong Earnings ChartList (SECL) and beginning to build small positions in them. I'm talking about AAPL, MSFT, TSLA, and AMZN. Remember, we're in a ZERO commission trading environment. I've bought TSLA multiple times already with just a couple shares each time - slowly easing into positions. But history tells me that we'll bounce soon. I'm keeping enough cash to buy more if we do take another fearful plunge.

I'm not saying this strategy is right for everyone. Please consider your own personal situation and tolerance for risk before buying anything. What's most important is simply understanding the way the stock market works.

Bottoms are put in place during high volatility periods like these.

Happy trading!

Tom