The month of February ended with a bang, make that a thud, as markets worldwide suffered the biggest rout since the 2007-2008 Financial Crisis.
Two weeks ago in our February 10th Weekly Market Outlook titled – A Correction on the Horizon – I outlined my reasons for believing that there was an imminent correction and so while this week’s correction didn’t surprise me, the speed in which it transpired was jarring and even caught the most experienced of traders off guard.
What made this correction unique was not the significant % declines, as we have seen greater declines in the recent past, however going back all the way to the 1930s no correction of this magnitude has occurred right after setting all-time highs.
Last year I shared a video where I examined history’s great market crashes and the common thread in all of the crashes was that they all occurred after we had already seen some market weakness versus the current correction from all-time highs.
Check out that video here – An Examination Of Major Market Reversals and Market Crashes.
So the question on the minds of many traders and investors is what exactly is the market signaling?
We are getting precariously close now to Bear market levels (defined by corrections of 20% and greater) and there’s no reason yet to believe that we don’t reach those levels if volatility persists.
So in this week’s video, with the volatility as measured by the VXX up over 50% week over week, I discuss the importance of adjusting your trading to account for the elevated levels of volatility and review the technical damage that was done to the indices and major US sectors and where things are likely headed.
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 2 – 6, 2020.
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