EB Special Report - Friday, March 13, 2020

I held a members-only webinar this afternoon that began at 1:00pm EST and lasted until perhaps 2:20pm EST to discuss the extreme pessimism that's remained persistent throughout this past week. It was done specifically to remind our members how major bottoms have formed in the past.

The Volatility Index ($VIX) closed yesterday at 75, the fourth highest close on record. In addition, the equity-only put call ratio ($CPCE) ended yesterday's session at 1.28, the highest reading over the past 15 years. I could argue that the combination of the VIX and CPCE indicates this current period is our most fearful ever - at least since Black Monday in 1987 and ranking right up there with the near financial system meltdown in 2008.

As we head into next week, there are a few things that could help the market stabilize. First, the Federal Reserve's next scheduled meeting is for Tuesday, March 17th, and Wednesday, March 18th. Look for further cutting of the fed funds rate and possibly other accommodative measures. Second, options expire next Friday and currently there is a TON of net in-the money put premium, suggesting that it would behoove market makers to see a rally. Finally, Congress and the White House are discussing an economic stimulus package that could be announced any time.

Will that be enough to overcome the additional coronavirus toll that we should expect over the weekend? We'll find out on Monday and throughout next week.

In the meantime, I want to wish everyone a restful weekend. We could all use one. For a copy of today's webinar recording, you'll find it on our webinars page. Here's the LINK.

Happy trading,

Tom