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Prepared by and Scott
Writing under the nom de plume of J.L. LORD

Wednesday | March 4, 2020

Hello Mayumi.





The Minis opened higher while the SPX was lower. We had a strange close on Monday, so even with Minis higher, the SPX cash and Dow opened lower.

Within 30 minutes of the open, the Fed surprisingly lowered rates 50 BPOS at once. This sent the Minis higher by over $60 and SPX cash up $46.49 (3136.72). The Dow hit a high of 27084 while AAPL got to 304.00 (+$5.19).

This was a huge and fast “short squeeze” as evidenced by the above chart of the SPX.


The rate cut came with a statement by the Fed that said “the economy is very strong”. This took a few minutes for the market to realize the contradiction of what just happened. If the economy is very strong, why do they have to do an emergency rate cut? If the coronavirus is nothing to worry about, why are they so worried about it dragging the economy down?

NOTHING ADDED UP, so the market flipped over and did a swan dive lower.

AAPL flipped over and went from $304 to a low of 285.80. It closed at $289.32, or down -9.49. The SPX went from a high of 3137.75 to a low of 2976.63.

The SPX had an astonishing range of $161.12 points. That came out to be about a 1400 Dow Point swing. WOW.

The VIX hit a high of 41.06, before closing at 36.82 (+3.4).

We are seeing unprecedented volatility that is slicing traders apart daily. Again, it is not just the coronavirus doing this. Fear of the economic consequences of the virus, a stock market that was overbought, and the prospect of a socialist possibly being in the White House in a few months is also messing with the markets.


The Fed cut rates and the anticipated run higher in the markets ended up being a market selling down 2.9% with the Dow closing lower by 786 points. Perhaps today we saw another nail go into the Fed coffin. Many people are screaming for the Federal Reserve to be shut down, and it being unnecessary.

THIS IS NOT ME SAYING ANYTHING NEGATIVE, rather just a rather fair amount of professional traders, analysts and politicians. If these guys are the smartest guys in the room and they can't manipulate a market higher or instill confidence, then what can?


TODAY: March 4

Monday we saw the Dow close up over 1200 points. Yesterday before the Fed lowered rates, the Minis were higher and appeared to be stabilizing. Maybe the worst of it was over? Who knows for certain how the day would have ended without the Fed, but it could likely not have been worse.

At the time this is being written, the Minis are looking +34 points higher, most likely because Biden seems to be winning more delegates for the democratic presidential nomination than expected. The stock market is petrified of Bernie. Perhaps some of the jump is that we are not being deluged with coronavirus news while Super Tuesday is hogging up the airways. Perhaps we are up because yesterday's selling was overdone considering lower rates makes stocks worth more. No one can accurately allocate the correct percentage each of those reasons have for helping the overnight markets. We will see how things are when Asia opens later.

You’re braver than you believe, stronger than you seem and smarter than you think”.
—Christopher Robin, Winnie the Pooh

Average year with lots of intermittent volatility
(-7.04% so far)

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