Weekly Perspectives: STFR’s

Weekly Market Outlook For March 23- 27 – Putting The Market Volatility Into Historical Context
March 21, 2020
Weekly Market Outlook For March 30 – April 3 – A New Bull Market?
March 29, 2020
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Hi traders,

Here is your weekly newsletter — perspectives on trading and financial markets.

Click here for last week’s edition.


Quote That Caught My Attention This Week

“Another remarkable day in what is clearly fin-de-regime … Things have already irrevocably changed and whipsaw market action reflects that this is the case. The only issue is how much further they change from here, and hence where markets settle.”  

Source:  Rabobank global strategist Michael Every


S&P 500 Flagging Historical Levels of Volatility

Source: Barry Ritholtz /  Bloomberg Radio’s Dave Wilson

The S&P 500 Index’s volatility for the 10 trading days ended Wednesday was 122%, according to data compiled by Bloomberg.

Only two periods have produced higher readings: the aftermath of the 1929 Black Tuesday crash and the 1987 Black Monday crash. The volatility gauge climbed more than 17-fold from Feb. 19, when the S&P 500’s latest bull market ended, through Wednesday.


Putting The Current Market Volatility Into Historical Context 

This past week the markets continued to crater lower as new government stimulus packages and central bank interventions were met with a fresh round of sellers.

What appeared to be some hopeful news came out last Sunday evening as the US Fed unveiled a surprise rate cut as well as a new asset buyback program – don’t call it QE – and caused futures markets to trade limit up.

However by Monday morning’s trading session traders quickly reversed course and took the futures markets limit down with the equities market opening limit down causing the circuit breakers to trigger for the second Monday in a row.

Clearly, the markets are pricing in a deep and painful economic downturn and the governments and central banks of the world will need to come back with even bigger stimulus packages and throw everything and the kitchen sink to try to stave off a global recession and possibly depression.

For the past decade, the bull markets have conditioned investors and traders to buy the dips however as I mentioned in last week’s video – a telltale sign of a bear market is that rips/rallies will be met with strong selling – STFR.

The S&P 500 is now trading below 2018’s lows while the TSX is even worst breaking below 2013’s lows.

The steep selloff has a lot of financial commentators describing the historic volatility of the current markets so in this week’s video I share one method (see the Tradingview script on the blog) of tracking and comparing price volatility which provides a useful understanding of the price volatility across asset classes.

Now watch this week’s Weekly Outlook video to see the setups and levels we’ll be watching as well as the technical outlook for the VXX SPY QQQ IWM DIA EEM TSX TLT GLD MGC BTCUSD EEM and more for the week of Weekly Market Outlook For – March 23 – 27, 2020.


The Largest Drops In BTCUSD History

Source: Coindesk:  Institutional Crypto

As I mentioned in last week’s newsletter, the stock market wasn’t the only market selling off.  March 12 was Bitcoin’s 3rd worst 24-hour price crash ever only rivaled by April 11, 2013, when bitcoin fell by almost 50%. 

On A Personal Note –

The world is currently going through some major upheavals and it stands to reckon that many of us and those close to us will be negatively impacted by both the economic downturn and ongoing pandemic.  

In these trying times, it is more important than ever to take care of your mind, body, and spirit.  Remember you are no good to others if you are not healthy yourself.  

Remember that even in the toughest of times if we can put our fears and resistances aside there will arise once in a lifetime lessons and opportunities.

Disasters come and go but it is my firm belief that if we can stay engaged and present we will all come out stronger in the long haul.  


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Weekly Perspectives: STFR’s

by editor time to read: 3 min