Stocks Fell Sharply and May Have Further To Fall On March 3

Stocks Fell Sharply and May Have Further To Fall On March 4

MARCH 3, 2020

STOCKS: DIS, NFLX, ROKU, SQ, BABA

MACRO: SPY, RATES

MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN DIS, NFLX

Reading the Markets Premium content from March 3:

Join me and the members of Reading The Markets on March 5 at 9 PM ET for an exclusive webinar. It is live, and I will be reviewing as much I can about the current state of the market, and will have a live Q&A session. But you have to sign-up to get on the webcast. Premium content – The Revenge Of The Bears Webinar March 5, 9 PM ET

What a wild trading session. Fed rate cuts, 1% swings in the final 30 minutes. I mean this is wild, look at the last 30 minutes on this chart, in 5-second increments. From 3:30 until 3:50, the S&P fell 1.5%, then increased by 1.2% and decreased again by 1.15%. In 20 minutes! Typical? I think not.

spx, S&P 500

S&P 500 (SPY) 

Look, as I said at the beginning of the week, the only thing that matters is that we don’t go below 2,855—the rest of this action is non-sense at this point. Why the market didn’t rally today on the Fed rate cut doesn’t matter, I’m not getting into here, I reviewed multiple times in my premium. The market now needs to reset. That is what I believe it is now in the process of doing. The market is likely to continue slushing around the 2,900 to 3,100 region over the next few days, while it tries to find its footing.  Premium content – FED RATE CUT UPDATE

The unfortunate thing is that tomorrow may be one of those days where we trade at the lower end of the range. It looks as if there is a head and shoulders pattern that has formed on the intraday charts, and it suggests over the very short-term, we trade down to around 2,950, and perhaps 2,875.

https://www.tradingview.com/x/uk95BUZn/

Is it possible for the S&P 500 to fall below 2,855? Sure. Will it? I haven’t a clue. I don’t think it will, but what I think doesn’t matter.

S&P 500, spy

Yields 

Anyway, 10-year yields fell sharply to around 92 basis points. Based on the current spread between US and German bonds, they may not even be finished falling.

spread

Meanwhile, the spread between the 30yr and 2yr widened, and could still widen further. It also seems to suggest that 2-years yields are likely to continue to drop in the future.

spreads

So we can continue to watch and wait. 

Roku (ROKU) 

Roku was down sharply, along with everything else. The stock is trying to hold on to support around $105 – $106, but I’m not sure how much longer that level can hold. $100 is still the next level to watch for, with $94 after that.

roku, roku

Square (SQ)

Square has been holding up amazingly well, and today I saw some bullish options betting that indicates the stock rises to around $91 by June. I wrote it up in an article for Forbes – Square’s Stock May Rally Sharply Amid Market Turmoil

square, sq

Alibaba (BABA)

Alibaba continues to hold up very well around $211, and I have to think that it has to be a good thing.

baba, alibaba

Disney (DIS)

Disney dropped today, and the good news is that it held the lows. If Disney could turn, that would be a positive sign.

disney, dis

Netflix (NFLX)

Netflix continues to consolidate in this wide trading range between $363 and $386, fine by me.

netflix nflx

Have a good one

-Mike

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