The Markets “Crashed” Today And We Have No Idea Why

Tale of the Tape 

Yesterday, we titled the Daily Rip, “The Markets Rallied Today And We Have No Idea Why”. Today, markets “crashed” and we still have no idea why. (ht: JC Parets)

Let’s be real – nobody knows and it’s only in hindsight that we can reconstruct the dynamic.

It wasn’t really a crash but it was pretty bad. The S&P 500 fell 3.39% and closed about 2% above Friday’s low close of 2,954. That seems like a pretty big level to hold given this volatile flop and chop we’re almost growing accustomed to. Over the last 9 sessions, the average daily move in the S&P has been 2.66% up or down. 

Financials did make new lows. They trade poorly. The $XLF Financial ETF and $KRE Regional Bank ETF both closed below Friday’s lows.

The 10 Year Treasury yield made another new all time low today settling at .93%. We realize we’ve mentioned this almost everyday for a couple of weeks but this is epic historical stuff going on here. Crazy.

S&P 5003,024-3.39%
Russell 20001,478-3.42%
Dow Jones26,121-3.58%

The Black Swan of 2020

Venture firm Sequoia Capital issued a memo to its portfolio companies warning about a potential economic slow down due to the coronavirus outbreak. This is a big call.

Coronavirus is the black swan of 2020. Some of you (and some of us) have already been personally impacted by the virus….

Read the full memo here. 

Netflix and ill, the Only Way to Beat the Coronavirus

Netflix has been strong as of late bucking this atrocious tape. What else is there to do while you are barricaded in your bunker avoiding the global pandemic? You binge watch The Office. The proof is in the price. $NFLX is up 15% YTD while the S&P 500 is down 6%. 

Here’s the weekly chart, this thing is flirting with resistance:

Stocktwits Social Sentiment on Netflix is near its lowest level this year despite the stock being up 20% since December 1. So the stock is hitting highs while Stocktwits Social Sentiment is chopping off lows. Very interesting. Have a look at the chart below.

Boeing Boeing Boeing, Gone

Boeing closed at its lowest level in 3 years, dropping 8% on the day. Peep the weekly chart below as the stock finally broke support. We watched this level throughout the 737 Max debacle and couldn’t believe how it managed to hold. 

Anyhow, it finally broke and it’s pretty ugly.

Today on Stocktwits…

Jack Might Not Be Moving to Africa

Jack Dorsey is now reconsidering his decision to move to Africa. The Twitter CEO cited the coronavirus and “everything else going on” as to why he is rethinking his decision. We are going to make the assumption that “everything else going on” has something to do with Elliott Management, the activist hedge fund, taking a billion dollar stake in Twitter. 

Here’s a Bloomberg article with more. 

Links that Don’t Suck

How Stocks Perform After the Fed Cuts Rates

Scientists Chase Snowflakes During the Warmest Winter Ever

NASA Picks Perseverance as Name for Newest Mars Rover