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This was the third worst day in the S&P 500 since 1926. Equity markets experienced a crash lower, with circuit breakers tripping to pause selling both overnight and after the market opened.

DJIA 3 16 Crash

  • 1: October 19th, 1987 - S&P 500 closed at 224.84 with a sell-off of 20.47%.
  • 2: October 28th, 1929 - S&P 500 closed at 22.74, selling off 12.94%.
  • 3: Today (March 16th, 2020) - S&P 500 closed at 2,386.13, bringing it down 11.98%.

The crash today came after the Federal Reserve announced a 100bps cut and $700B of new quantitative easing, as well as an emergency additional $500B in repo operations to liquefy Treasury (and credit) markets.

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Nevertheless, the fear-driven selling brought the markets much lower, below a critical level of technical support at 2,400 on the S&P 500. Further down there is support at 2,000-2,100.

Below there the all time lows of the previous two bull markets that peaked in 2000 and 2007 would bring a support level of about 1,600. At this point the stock market is pricing in a severe recession and projecting COVID19 lasts for many more months, compressing revenues across the US, where 66% of economic activity is driven by consumption, and where many consumption habits have been put on pause indefinitely.

Source:

From The TradersCommunity News Desk

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