RegMed Investors’ (RMi) pre-open: markets are still spooked

February 28, 2020 8:36am

Markets took six (6) days to fall into the correction zone but, what’s the next upside engine beyond the word - oversold?

Correction territory; are today’s bottoms to BUY or wait, it’s just a game of pick-up-sticks and willingness to wager on pricing?

Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.

Dow future are DOWN -0.58% (-147 points), S&P futures are DOWN -0.69% (-23 points) and NASDAQ futures are DOWN -79% (-67 points)

U.S. futures pointed to more losses yet less than the flop that sent them more than 10% below their record highs;

European stocks extended a historic week of losses as the coronavirus outbreak continues to pummel global markets with the pan-European Stoxx 600 falling -3.3% by late morning;

Asia Pacific markets are still declining as fears over the spread of the coronavirus globally; the MSCI Asia ex-Japan index dropped 2.57%.

Henry’omics:

A little history lesson, “There have been 26 market corrections (not including Thursday) since World War II with an average decline of 13.7%. Recoveries have taken four months on average. The most recent corrections occurred from September 2018 to December 2018. The S&P 500 bounced into and out of correction territory throughout the autumn of 2018. The S&P 500′s close below 3,047.53 — its current threshold for a correction — also marked the quickest 10% decline from an all-time high in the index’s history. <CNBC>

• A correction is defined as a 10% decline in one of the major U.S. stock indexes, typically the S&P 500 or Dow Jones Industrial Average, from a recent 52-week high close. Historical analysis shows these corrections result in a 13% decline and take about four months to recover to prior levels, on average.

Historical analysis shows … recovery has taken four months on average.

A hint, seven (7) major Asia-Pacific markets and European stocks have fallen into correction territory; still the global MSCI ACWI index is down 9%, while the Stoxx 600 stays on course for its worst week since October 2008.

Short-term investment is always about a SELL/BUY moment in time; in the near and long-term, it will be a process which doesn’t always earn a ROI.

Thursday night’s title: “wild sector overreacts with panic in sentiment and market breadth by coronavirus fright and dread. A dynamic in play, a dislocation that doesn’t let investors hide anywhere but, are we truly in correction territory after today’s freefall?”

• the NASDAQ closed DOWN -414.30 points (-4.61%)
• the IBB closed DOWN -4.93% and XBI closed DOWN -3.96%;
• the range of the 2-upside was +0.30% (BSTG) to +1.20% (SLDB) while the 33-downside ranged from -0.08% (AXGN) to -18.29% (SAGE); 
• the close was negative with an A/D line of 2/33, 0 flat of 35 covered;
• 22 out of the 33-downside had higher than the 3-month average volume;
• 0 out of the 2-upside had higher than the 3-month average volume;

Q1:

February registered 8 negative, 8 positive closes, 3 vacation days and 1 holiday – so far.

January registered 9 negative, 10 positive closes and 2 holidays.

Q4:

• December register 11 negative and 10 positive closes
• November registered 1 holiday, 12 positive and 8 negative close;
• October registered 10 positive, 1 neutral and 14 negative closes;

Opinions expressed are those of the author and are subject to change, and not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.  All investments are subject to risks. Investors should consider investment objectives.

Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.