Markets, Mobs, and Mayhem

Weekend Rip 3/8

Chaos met the markets last week with the S&P 500 closing at least +/- 2.50% every day except Friday. The S&P 500 volatility index, $VIX, closed the week at 42 and hit levels not seen since 2009.

Seeing the toilet paper panic reminds us of Robert Menschel’s, Markets, Mobs, and Mayhem: A Modern Look at the Madness of Crowds. If you haven’t read it, find a copy. It’s a timely read. Here’s the summary listed on Amazon.

…Menschel explores the phenomenon of crowd psychology and its effects on business and culture. Explaining how crowd psychology creates market bubbles and irrational exuberance, Menschel mines world history—from the rise of the Nazis in Germany, to the fanatical love of brands, to the Dutch tulip craze of the seventeenth century, to America’s 1990s Internet bubble…

Here’s the weekly S&P 500 chart:

S&P 5002,972+0.61%
Russell 20001,449-1.84%
Dow Jones25,864+1.79%
Weekly Percent Changes

Dow Jones Transportation Average

With the effects of the coronavirus, it’s worth keeping an eye on the Dow Jones Transportation Average. If people are being asked to self-quarantine they won’t be traveling… right?

Here’s a chart of the Index. Its testing support going back to November 2016: 

Here are the 20 stocks included in the Index:

Market Psychology: How to Keep Your Head While Those About You Are Losing Theirs

Tomorrow, Stocktwits own Phil Pearlman will present with All Star Charts’ JC Parets at the Traders Expo in Brooklyn.

It is a timely discussion on market psychology titled – How To Keep Your Head While Those About You Are Losing Theirs. You will not want to miss. Monday, March 9 at 4:15 PM at the Brooklyn Marriott. We will head to a nearby bar for cocktails after the preso. Check it out!

The Oil Market is a Mess

We touched on it Friday, but Saturday it was reported that the Saudis plan to make its biggest price cuts in at least 20 years and increase output. This comes on the back of a rough date with oil producers Friday.

Supply and Demand 101: If the Saudis increase output, supply increases. If there is not an equal increase in demand, the price of oil decreases. 

Plus – nobody’s traveling with this corona mess, so demand should decrease. The price of oil has already been crushed, down 32% YTD, and it could get even worse. 

Global economic warfare is a mofo. Place your bets.

We should note, shares of Saudi Aramco are now below its IPO price.

Stocktwits Social Sentiment Update

Here’s the updated Stocktwits Social Sentiment data for the S&P 500 ETF ($SPY). Incredible to see the uptick in bullish sentiment from the +4% rallies on Tuesday and Thursday. Social sentiment is off the lows but still significantly depressed from mid-February.

The Wall Street Crash 1929

How I Built This – Shopify: Tobias Lütke

Here’s a great podcast with Shopify founder, Tobias Lütke.

The Week Ahead

And now a brief and well-organized look ahead at the trading week beginning Monday, March 9, 2020:

Economic Calendar:

3/11 February Consumer Price Index (8:30 AM EST)

3/12 February Producer Price Index (8:30 AM EST)

Here’s the full Economic Calendar provided by Briefing

Earnings Ahead:

Here’s Earnings Whispers’ great visual.

Be sure to know when your stocks are reporting. Here’s the full earnings calendar.