Lots of Records, But Show Me The Money

Technically, the markets are at record levels with the Russell 2000 (IWM) being hammered more than the major large caps. On the daily-scale, it is at record over-sold levels in the MACD and ADX (chart below).

On the weekly-scale, however, there were several other times where it was more over-sold. Technically, this leaves the index open to further downside. On a positive note, the log primary trend line is still 10% lower (chart below).

The market thrust oscillator has moved past the 90% probability of a bottom int the SPX (chart below).

There was a record number of lows on the NYSE on Monday. Spikes in the lows, correspond with bottoms in the SPX (chart below).

Down-spikes in the SPX:10Y T volatility ratio correspond 70% with bottoms in the SPX (chart below).

The total put:call ratio has spiked to an extreme of 1.83; a 14-year record for hedging. That happens near market bottoms. The SPX has bounced off the 62% Fibonacci retrace of the entire Dec. 2018 to Feb. 2020 rally. This makes a bounce, if not a complete turnaround, likely (chart below).

Over-riding all the technical records, is the money. We have been screaming about the need for serious fiscal policy for weeks now, and yesterday we got some words about it from the White House, but no specifics. Money has to be delivered to the individuals and businesses soon, or else what should be a short-term economic set-back, could turn into a serious recession. Supply disruptions, if not funded properly by the sovereign government, turn into demand collapse. And the latter have a nasty habit of being long-term problems. The only way to prevent a demand collapse is to put money in the hands of individuals and businesses. Supply will return if the demand is there.

Britain has announced a strong fiscal package that should work. Let us hope the US does the same…we are not totally confident, however.