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

Monday | March 2, 2020

Hello Mayumi.

YESTERDAY'S CLOSING PRICES

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YESTERDAY: February 28

Friday started with the major indexes putting the the nail on the coffin of panic. After four days in a row of fast selling, combined with fear and panic, the day started with the Dow Jones being down 1,000 points for the 4th day that week.

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The SPX opening lower and hitting a bottom of 2855.84 (-122.92) was a shock, and people started to make analogies to 1931 and the Great Depression. After the first 30 minutes, the market started to bounce in a spastic manner with 5 steps forward and 3 steps backward.

Sixty (60) minutes later (10pm central), the SPX shot up 90 SPX points very quickly in a 30-minute period. Immediately, all the analysts started to proclaim that we might have seen the bottom of selling, and perhaps a “V-bottom” was taking place. The SPX had bounced from 2855.85 to 2959.75, setting the highs for the day. This bounce was the result of rumors that the Fed was going to come out soon and cut interest rates, and a prediction by Goldman Sachs that the Fed was going to make three cuts in a row soon.

Once the euphoria wore off and lack of evidence of a rate materializing, the SPX retreated -60 points to hug the SPX 2900 line for safety. This 2900 was in the middle of the lows and highs for the day, and seemed like a safe spot to park until we learned more about a potneial rate cut.

NEXT

The market bounced around between 2880 and 2940 until near the end of the day with three different news events inserted designed to help the markets.

FIRST – The Fed made an announcement that the eonomy was strong and the Fed was prepared to do whatever it takes to stabilze the markets. This failed to produce a move higher as one would expect and the Fed was trying to create.

SECOND – President Trump spoke momentarily about his desire to have a second tax cut. Again, this had the same effect as the Fed's speech – nothing. The market acted as if the President did not talk that day.

THIRD - In the last 15 minutes of trade, some came in trying to spike the market higher by putting in BIDS for LARGE quantities of the Minis. I was told by a friend that he saw a bid for 25,000 Minis in the last minutes. This DID work. In the last 15 minutes, the SPX shot from 2880 to 2954.22 before settling at the top of the hour. After the close of the SPX cash, the S&P 500 futures kept climbing, getting close to 3000 before settling on $31 high on the day.

OUTSTANDING

AAPL – This last minute run higher managed to get AAPL to close down only -0.16 at 273.36. This was a phenomenal move considering the stock was as low as 256.37 (net -17.15) earlier in the day.

VIX – the Volatility Index saw panic for the first time all week. The index hit a high of 49.48, but the run higher had the VIX close at 40.11 (+0.95).

TSLA – What had been over $980 the previous week, the stock hit a low of 611.52. Think about that swing.

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TODAY: March 2

The good news is that at Midnight Monday, more of the E-minis are +15 points higher at 2966. This is 11 points higher than cash closed.

There is negative news out about the coronavirus (as follows), and yet the Minis are showing a positive move on the open.

DEVELOPMENTS OVER WEEKEND:

  • A total of 3,000 total deaths have occurred.
  • China reported another 42 of them.
  • Rhode Island stated that it has a patient who recently visited Italy that it thinks is a coronavirus case.
  • Washington State confirms 2 more cases.
  • California has 2 more cases.
  • Israel has a total of 10 cases.
  • South Korea confirms 22 have died.
  • Germany sees a doubling of its infections in 24 hours, for a total of 129.
  • Mexico now has 5 cases.
  • Italy reported a 42% increase overnight to almost 1700.
  • Etc.

TODAY

President Trump is meeting with pharmaceutical companies.

DIRECTION?

Until we get a single event that the world collectively sighs out a deep breadth of relief, volatility in the markets is likely to continue. Trading is very difficult given that the markets are jittery and each news event bringing an infection in a new state or another death is moving the markets dramatically. Unless you can predict when a news article will be released, and if it will contain positive or negative news, it is impossible to know what the market will do from moment-to-moment.

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

2020 ONE-YEAR PREDICTION:
Average year with lots of intermittent volatility
(-8.5% so far)

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Separate update coming.

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