IS IT OVER? Is the coronavirus being accepted as a “non-event” overnight?” Or is the over-inflated stock valuations now at acceptable levels?
The market opened with nervousness. The SPX opened $40 points higher, and then fell. Within the first 30-minutes, the SPX was down $9 points, and traders were getting nervous that the late Friday jump was a head fake.
SECOND HOUR AND MAJORITY OF DAY
After the first hour, the SPX and stocks started to climb again. This time, the SPX went higher by about 80 points and vacillated in a $20-point range until the last hour of trading.
The sitting in a right range, even though it was $80 points higher, had people still a little concerned. Most bottoms in the market see the major indexes run higher, and then keep running. This was not happening today—we just sat and felt heavy. Ironic how the market can feel heavy despite the Dow being up 800 points.
With 2 hours left in the day, the market started to roll over and fall. What is weird is that it didn't feel like it was going to go into a “flat spin”, but was a controlled decline.
Then in a seemingly collective sigh of relief, we saw a voracious appetite for risk. Stocks were bought at the “ask price” as fast as a new “ask price” showed on the screen. The safe have bonds / TLT went from positive in the day to negative. Bonds kept falling in a “risk on” attack.
The SPX ran high by 100 points (1000 Dow points) in the last hour. I guess there were a lot of people trapped short. The coronavirus has people irrationally nervous. How nervous? Look at this headline?