March 18, 2020
Stocks – none
Macro – Spy, IWM
It certainly was another horrible day. It seems like these are endless. Every time it looks like the signs are improving, days like today happen. I’m left feeling unsure where the bottom is. We managed to fall to 2,273 today, before finding a bounce. Will that level hold, it is hard to say at this point. The end of day run-up was nice and left us all feeling good, but I can’t imagine at this point we can get out of this without testing the lows.
The market fell right through the December 2018 low as if were nothing, and perhaps that was the most unsettling part, but then by days, it rose through that level like nothing. Very confusing trading action. Nothing makes sense anymore.
Meanwhile, the RSI is now flatlining, and that gives me less confidence in the trend.
The VIX also remains well over 70 and indicates that it is still too much fear out there. The fact that VIX can’t break is concerning.
My biggest worry, though, maybe this chart, as of today, we broke the what is the last 2009 bull uptrend left, that I could map out. I can’t find anymore after this, and the RSI snapped today on the monthly chart.
The RSI hasn’t been oversold on a monthly basis since 2009. So there you have it. Now you know why I was so dire about the 2018 lows holdings, and why I was so desperately looking for signs of a bottom. Perhaps today will prove to be a bottom; perhaps it won’t. I don’t know. If it isn’t the bottom, then what is stopping this market from falling to 1,812 the 2016 lows. That is where the Russell is trading right now, it is down almost 45% since the middle of January! That is insane!
Things will pass, and they will get better, history has taught us that. How long it takes, and how rocky it will be, I don’t know. Just remember, there is no right or wrong answer in investing; everyone is different; the only thing that matters is what lets you sleep at night and not worry.
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