Scott Burrill - Market Notes

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Scott's notes
Scott's Market Notes

A Rate Cut is Not a Vaccine

Mar 1, 2020

Upon review of multiple securities and multiple asset classes, this note could be pages in length. But for the interest of brevity, we are at extreme readings across-the-board, not unlike the GFC of 2008-2009.

Coming into the weekend, Treasuries have effectively priced in a 50-basis point Fed Funds Rate cut. An emergency rate cut may happen quickly. But, a rate cut is not a vaccine. The global economy is working through both supply-chain and demand shocks, so markets are rationally repricing to the vacuum of opacity around the virus.

The S&P 500 implied move last week was + / - 54 points. We moved seven times that. That's a Black Swan Event.

The S&P 500 Weekly Implied Move is + / - 173 points, or 53% implied volatility, for a range of 3128.07 to 2780.37. The range is reasonable within my Levels. 2812 and 2734 are concentric areas for support.

The Trends are Down, and the Bias won't flip positive until 3038.75 towards 3125.

As I type this, the Dow is forecast to open down 589 or ~70 S&P 500 points.

Apart from the COVID-19 news, this is an active week for Economic Releases and Fedspeak.

Updated Levels.

All the best,

Scott

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