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Stock Market Technicals For Week of March 23, 2020 [Premium Articles]

This premium report allows limited free access. The report is for week of March 23, 2020, and includes analysis of major market indexes and sector ETFs. Access to full article requires Premium Articles subscription.

Report contents

  1. Weekly summary and recap.
  2. Major Index weekly analysis.
  3. Major index overbought/oversold conditions.
  4. Low volatility versus high beta large caps analysis.
  5. Sector performance.
  6. Chart of the week.
  7. Conclusion.

1. Weekly summary

  • Stock market crashed due to virus pandemic.
  • Dow Jones Industrials fell most due to BA plunge.
  • Bond market ended the week flat amid high volatility.
  • Gold fell due to U.S. dollar strength. Crude oil plunged.
  • Stocks entered bear market mode.

Recap (March 16, 2020 – March 20, 2020)

Index Week YTD
S&P 500 -15.0% -28.7%
DJIA -17.3% -32.8%
NASDAQ -12.6% -23.3%
Russell 2000 -16.2% -39.2%
10-Year Note -1 bps -0.98%
Gold (London) -4.4% -1.8%
Dollar Index +4.8% +7.7%
WTI Crude spot -38.6% -68.2%
Bitcoin Futures +16.5% -13.9%


2. S&P 500 weekly analysis

The S&P 500 index plunged 15% on the week.

As noted last week, “due to the speed of the correction, the index is not yet oversold in weekly timeframe according to PAL OB/OS indicator.” This is still the case even after this crash and shows how technical indicators fail to respond under fast market conditions due to the lag in following price.

The market is now in bear market mode with the S&P 500 down about 29% year-to-date and nearly down 32% from all-time closing high.

Last week we wrote:

It is important for central bank to keep the index above bear market territory and avoid massive sales from passive investors. The important level for S&P 500 is at about 2708. However, depending on news about the virus spread this may not be possible.

Apparently, the selling was so intense that central bank interventions with unprecedented liquidity did not prevent the near market. On a weekly basis, the S&P 500 index fell -7-standard deviations and -10-MAD (mean absolute deviations) as shown in the chart bellow.

The S&P 500 has dropped more than 15% in a week only once before since 1945 and that was during the 2008 crisis, as shown in the above chart. That was in week ending October 10, 2008, with a drop of 18.2%. The market fell about 24% more after that to find a bottom on March 6, 2009.

In a recent Premium Insights article we included an indicator that has the potential of timing a bottom. Below is the chart with this indicator updated as of the close of Friday, March 20, 2020.

Access to full article requires Premium Articles subscription.

 

This premium report allows limited free access. The report is for week of March 23, 2020, and includes analysis of major market indexes and sector ETFs. Access to full article requires Premium Articles subscription . . .

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Specific disclaimer: This report includes charts that may reference price target levels determined by technical and/or quantitative analysis. No updates to charts will be provided if market condition changes occur that affect the levels on the charts and/or any analysis based on them. All charts in this report are for informational purposes only. See the disclaimer for more information.

Disclaimer:  No part of the analysis in this blog constitutes a trade recommendation. The past performance of any trading system or methodology is not necessarily indicative of future results. Read the full disclaimer here.

Charting and backtesting program: Amibroker

Data provider: Norgate Data

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