The Swine Swoon
The futures are down 2% as I’m writing this. I will be watching the volume very closely today to see if this virus is enough to put a dent in the rally. We have still not had a single day of “serious” selling.
From what I’ve read so far, this virus doesn’t seem very serious. Many people have already recovered from it before they even knew what they had. Only Mexicans have died from it, while tourists who caught it in Mexico recovered. Perhaps something about flying on an airplane weakens the virus, and the tourists were cured while they were flying home.
In any case, this should be bad news for companies that make “swine products” such as bacon. If people avoid crowds, retailers should suffer while Amazon benefits, and restaurants might be hard hit, especially rib joints.
Since we don’t yet know how dangerous this virus will really be, I expect traders to sell first and ask questions later. We may have another “trend day” down like last Monday where panicky bulls sell into any little bounce.
Crazy Fed Swings
On Friday, when the Fed released the stress-test report, the market went haywire just like after an FOMC announcement. However, I will have you know that the initial plunge down bottomed at 2:13pm at 856.77, which was only 0.05 points off from the 856.72 Fibonacci level that I calculated over a month ago.
Also, I never posted the chart, but when the FOMC announced its QE policy at the last meeting, the TNX plunged and bottomed at a Fibonacci level that I had on one of my charts. So, if you get good with fibs, they are a fantastic tool for anticipating the extent of the wild swings created by these big government announcements.
Here is an update of the levels I am using for the SPX. If the market is immune to the Mexican flu, and is able to eventually rally-on later in the week, the January 6th peak is the logical target, and I have calculated the Fibonacci levels that might be resistance on the way up.
943.85 – January 6th peak.
927.40 – Box of Banks Fibonacci projection.
917.18 – Box of Banks Fibonacci projection & Dec peaks.
908.91 – Box of Banks Fibonacci projection.
900.65 – Box of Banks Fibonacci projection.
893.95 – The 127% level of the first chart on this page.
888.89 – Box of Banks Fibonacci projection.
875.63 – Rally peak so far, & February 9th peak.
856.72 – Fib level from Box of Za-Zoom & stress-test low on 4/24.
851.92 – Start of Stress-Test Gap on April 24th.
845.61 – April 2nd peak.
835.48 – Low on April 14 & 23, and gap from April 7.
825.16 – Wells Fargo Gap from April 9th.
811.08 – M2M Gap from April 2nd, and high on March 31st.
804.00 – Important level going back to Nov 19th.
780.00 – Cliff before 666, and low on 3/30.
768.54 – The Geithner Gap from March 23rd.
752.44 – November 20th low close.
741.02 – November intra-day low.
Other Important Levels
800.58 – Weekly low close from 2002 (October).
815.26 – Monthly low close from 2002.