Market Commentary & Analysis For March 7, 2020

The S&P 500 market added 0.6% for the past week. Although that is technically correct, the small change disguises the fact that the broad S&P 500 index bounced approximately a 240-point range since the previous Friday session.

Coronavirus retold worries remained a primary concern, and the increase in new cases in the United States was the main focus, as well as the abroad exerted influence on the stock market's expectations for growth.

There was a strange moment on Friday afternoon session when in the forty minutes going into the final hour of the trading, the VIX index kept climbing and rising higher, preventing the S&P 500 index from doing its solemn duty of climbing higher into the weekend. 

And suddenly, ruffly right after 3 pm EST, the VIX index sank, diving by as much as fourteen vols from 54.39 (the highest posting since of Lehman Brothers collapse) to 40.84 marks, the low for the session, and triggering another remarkable equity buying spurt, which BTW, almost carried the Dow Jones index into green territory.  

So what actually happened? The answer - Someone (The unknown at this time hedge fund/market maker) ultimately got blown out around 3 pm EST. Will the market resume the plunge on Monday's session?. Stay by.     

The Fed announced a virus crisis rate cut of 50 basis points on Tuesday; however, the fed funds futures anticipated another definite rate cut on the following day. United States Treasuries soared higher during the entire week, sending the Ten-year yield lower by whopping 42 basis points to finish at 0.71%.

Last week the Fed blew the rate cut. Just like the recent crisis (2008), Tuesday’s rate cut does not guarantee we’ve seen the bottom of this correction. Globalism is a dead man walking, and it is dying, many people are afraid and on the edge of confusion, as major cities all over the globe are like a ghost town.

United States Congress approved $8.5 Billion in emergency disbursement measures while Trump administration officials suggested the targeted stimulus, that however, did very little to change investors' sentiment.

Counter-cyclical market sectors such as utilities posted +7.9% gain, consumer staples sector produced +6.2% gain, health care sector with +5.0%, and real estate sector with +4.8% ended the trading week in the positive territory. 

The cyclical sectors carried the brunt of the burden with the energy sector posting -7.3% and financials sector print -4.1% finishing as the losers at the bottom of the ladder. 

The vital energy sector declined as crude oil skidded to its lowest level ever since the middle of 2016 in the $41 range. News stories from midweek hinted that the Organization of the Petroleum Exporting Countries (OPEC) would conform to a meaningful output cut; however, on Friday's meeting organization failed to deliver an agreement.

Some thoughts on Gold market fever and coronavirus

Here is what happened in the Gold market in 2001. Gold was priced at $272/oz by 2011; it had surged all the way up to $1,896. What started the ball rolling this decade continued rally? Severe Acute Respiratory Syndrome (SARS). 

At the present moment, Gold heads to a nearly Seven-year high as traders and investors escape to safety amid virus anxieties. The Dow-to-Gold ratio was at 15.36 last Friday. It peaked at 22.40 on October 1, 2018, and it is on its way to Maginot 5 number and lower.

As soon as it drops below five marks, well-informed traders and investors know it is safe to return to the equities market. Therefore, if you make the wise move, you could preserve and grow your wealth repeatedly many times over.

Gold Market

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The completed Inner Gold Rally $1,690 retest happen on March 6. The primary support now stands at Mean Sup $1,637, and low probability $1,585. The resistance holds at a new six-year high marked at $1,692.20.  

The coronavirus outbreak story had been in the headlines for six weeks now. The markets snubbed it and kept climbing. So for the last two weeks, the markets were only keeping pace with where it should have been a couple of weeks ago.

The other point to say regarding February's last week’s significant decline is its characteristic of the mad, broken financial system I’ve been lamenting about for a long, long time.

Let's face it; the monetary system and markets are rigged to the core with fake money, manipulation, intervention, fake trades, and robotic trading,  fake news, and fraudulent deals. The whole system has become very, very sick.

Say what you will about the coronavirus; however, this virus shows and exposes the flaws and lies in the whole system, especially the vulnerabilities produced by fake money.

We do not want to partake in this toxic mayhem. As prudent investors, we want to bawl out and sit on the sidelines in physical Gold and get on with our lives until - a market climate that is much more suitable for long term returns paying attention to Dow-to-Gold ratio indicator. Got Gold.


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