Premium Market Analysis

Market Statistics

Recap: Monday, February 24, 2020

Market recap for February 24, 2020, after a 3.2% plunge in S&P 500 due to tail risk from virus pandemic fears.

SPY

SPY ETF plunged 3.3% below the adaptive moving average AMAV.

Usually when there is a large correction below the AMAV there is continuation.  Note that support is near 320.75 and a break below that level could mean a much deeper correction is coming.

The classifier of next day return warned about a possible short-term top but after the plunge yesterday it fell in neutral territory and at this point  it does not provide a signal.

Note that there have been 32 occasions when SPY opened with a down gap larger than 2% and closed with a loss larger than 2%.  Buying at the close and selling at the next close  does not provide and edge based on this limited sample. Win rate is 56.2% and performance is flat after 2011.

S&P 500 index

Despite the plunge, there are still several overbought stocks as shown below.

XEL is overbought for 26 days in a row,  which is a new record.

Only 13 stocks from S&P 500 rose yesterday, most from pharma, energy and mining sectors.

Sector ETFs

All major sector ETfs were down yesterday with XLE (Energy) leading with 4.2% loss.

As expected, utilities (XLU) fell the least but still down 1.17%.

Shorting the market?

Good luck. The most violent rebounds have historically occurred along bear markets and large corrections . Shorts, although right about direction, usually lose due to these rebounds.

As it may be seen from the SPY chart above, almost all daily gains larger than 3% have occurred during downtrends or large corrections.


Charting and backtesting program: Amibroker

Data provider: Norgate Data

Technical and quantitative analysis of major stock indexes and 34 popular ETFs are included in our Weekly Premium Reports. Market signals for position traders are offered by our premium Market Signals service

If you found this article interesting, you may follow this blog via RSS or Email, or in Twitter

Disclaimer