Well, I was certainly early to look for a bounce on February 26th at the 100 day moving averages. So, let’s run forward 9 more days to yesterday’s close on March 10th. What does the data show us now?
The first thing I notice is a fear reading (14) I have not seen over the last 2 years. This IS the lowest reading (highest fear) of that period.
Can it go lower, yes. However, these readings are even more extreme in one direction that we saw on January 26.
The March 10th CNN Fear and Greed Index revealed 6 of the 7 parts as extreme fear.
As we can see, at the end of the trading day in US stocks, only the Dow was close to its 200-day moving average.
The cryptos joined stocks in this hard decline as well with the lowest fear and greed reading over the last 18 months.
Would you buy now? Would you sell now? This is the hardest question, especially when your competition is a computer, trading in milliseconds, and commodity trading advisors.
Now let’s look at some other pictures.
Here is what Bitcoin looked like at the end of March 10th.
And considering the ongoing war between Russia and Ukraine, would you expect German stocks to be climbing while US stocks were dropping hard?
Looking at information that can explain the selloff still does not leave us with a feeling of certainty regarding what we should do.
At this stage and considering the long bull market that has gone on since 2009, we need more information, and information that can only come with time.
So today, as much as we like low volatility markets rather than hard sell-off markets, we all must make decisions based on things taking place in real time.
At this stage in the decline in the SP500, the stock index that more financial products are tracking than any in the world, we must watch where things go AFTER the bounce. Will we break the 6,000 level again when this index bounces? This is a very important question in the weeks ahead.
We may go lower, but the lower we go daily, the further the pendulum is being stretched for a swing in the other direction.
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Disclaimer: Best Minds Inc was closed in 2018. I am retired. Nothing I am writing should be taken as advice to buy or sell any form of security or asset. Everyone must study and consider their own situation before putting money anywhere, as well as understanding they are living in a time where major changes at the highest levels of money are taking place. These writings are free.
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