EB Daily Market Report - Monday, March 16, 2020

Tom Bowley - March 16, 2020

Executive Market Summary

Futures were lock limit down once again this morning, despite the Federal Reserve cutting the fed funds rate by 100 basis points and announcing a $700 billion quantitative easing (QE) program over the weekend
The circuit breaker kicked in at 9:30am EST when our major indices opened well below 7% lower
A rally to cut losses by roughly 70% followed, but selling appears to be building again into the close
Volatility ($VIX) just hit 80 and we may close above the record high close of 80.86 from November 20, 2008
The 10 year treasury yield ($TNX) fell 22 basis points to 0.73% at last check, challenging financials (XLF, -12.73%)
Real estate (XLRE, -14.44%) and energy (XLE, -12.80%) were hit the hardest today; the latter suffered from another 8.98% drop in crude oil prices ($WTIC)
We have no active trade alerts at this time

Market Outlook

First - for tomorrow's Trading Places LIVE show at StockCharts TV, it will be pre-recorded and then broadcast at 9:00am EST. Just wanted to give you a heads up. I'm accommodating the StockCharts schedule, which has been disrupted out in Seattle, Washington due to the coronavirus outbreak there.

I apologize for sending out this abbreviated report so late in the day, but I really wanted to see how the stock market reacted after the poor open. Clearly, the intraday recovery has fallen apart late in the day and we now have the Volatility Index ($VIX) above 80 as we approach the close. This an extreme reading that's only been seen one other time - during the 2008 financial crisis.

We're still awaiting a clear cut bottom being set in place, but I can't definitively say we've seen it. Fear overrules rational behavior, so technical support areas will be hard-pressed to hold. A key technical level on the S&P 500 will be the December 2018 low at 2346.58. Today's low earlier this morning was 2401.57. But again, with extreme sentiment readings, that support area may not hold.

One theme that seems to be holding again today is that we see gaps lower at the open with net buying the balance of the day. With just a few minutes left in today's trading, that seems to be the case once again.

I'll likely be back tomorrow morning with a more detailed report, but let's see what futures bring us overnight first.

Happy trading!

Tom