On Monday, March 10, stocks plunged to their lowest levels in six months, driven by relentless tariff threats from President Donald Trump
U.S. fell again this week but we had another late week rally that erased some of the losses. This also happened on the past two Fridays. However, in both cases, stocks fell hard on Monday and erased Friday’s big rally and then some a few days later. Will it happen again on Monday? Only time will tell. Earlier today we had disappointing consumer sentiment data which normally is bearish, but instead of falling, stocks rallied. Typically, it’s a good thing to see the market rally on bearish news. Let’s take a look at the major events that happened this week.
Correction Territory:
Normally, a pullback is defined as a decline of 1-10% below a 52-week high. A correction is defined as a decline of 10-20% and a bear market is anything that is over 20%. The benchmark S&P 500 officially hit correction territory on Thursday, falling 10% from its 52-week high. However, Friday’s big rally put it back in pullback mode as it is now 8% below its 52-week high. However, the Nasdaq 100 (QQQ) is in correction territory and is 11% below its 52-week high. The smaller and mid cap indices are also in correction territory. The small-cap Russell 2000 and mid-cap S&P 400 are both down 17% and 14%, respectively. That means most of the market is in a correction and the small cap stocks are very close to hitting the -20% bear market threshold.
Super Oversold
Just about any technical or sentiment level you look at will show you that this market is super oversold and way overdue to bounce. Near term, the bulls want to see the major indices rally and get back above their respective 200 day moving average lines. Meanwhile, the bears want to see the market roll over and have another leg down.
Exaggerated Moves:
It is important to note that in downtrend (present market included) we tend to see exaggerated moves both up and down. Right now the market is in a downtrend and we can easily see big wild swings both up and down.
Week In Review:
The week began with a thud.
