Last week looked a bit grim as for the US trading as well for the British. DJIA finished on Friday at 25,864, SP500 2,972 and NASDAQ at 8,575. The numbers been going down from the last FED announcement which didn't help at all, only putting more bearish behavior on the markets. Through the weekend as trading stopped, DOW futures lost more than 1000 points finishing Friday trade at 25,789 just to wake up on Monday morning with a headache of 24,188. Monday trades are not looking so good either. As the oil trade war between Saudis and Russia emerged, the oil sells noted biggest drop since 2014, dropping 10% between OPEC and its allies. Crude oil CLJ20, -18.484% BRNK20, -19.837% followed that pullback with a 20% drop Monday, while the Dow Jones Industrial Average DJIA, -6.543% shed 1,500 points in a bruising session to start the week. As to add to the chaos and pain caused by the oil prices dropping to the lowest point till 1991 first Gulf War, the prices are putting pressure on credit and leveraged companies adding extra stress on their debit caused by the virus outbreak.
As we speak now some people suggest that the market it self is approaching a bear point as it was on the bull, up from 2009, coming out from the housing bubble recession. Some speculate that this could be an opener for a big blow to the markets as Italy closed down a big portion of its cities, in fear of the virus. As to speak for the bull market - happy birthday as on 9 of March the market has been in the bull for 11 years now. Monday morning is showing a decline as the opening is not good as I am writing this article, only one component of DOW is in green and that is Walmart Inc. +1.71% .
"Selling on the New York Stock Exchange Monday morning touched levels considered panic-like by technical traders, as the Dow Jones Industrial Average DJIA, -5.661% slumped more than 2,000 points, or 7.3%. The Arms index on the NYSE hit around 2.067 Monday morning and had been at 2.46. The decline in the S&P 500 index SPX, -5.484%, off 7%, triggered an initial circuit breaker, which resulted in a 15-minute halt in trading, a tumble in crude-oil prices and worries about coronavirus have rocked stocks " to quote Mark DeCamber, Marketwatch editor. In other words, this may be another Black Monday, with trading stopped for 15 minutes, only to save the economy of 30 biggest American companies. And as president Trump twitted - "Saudi Arabia and Russia are arguing over the price and flow of oil. That and the Fake News, is the reason for the market drop." And he also added " Good for customer, gasoline prices coming down!"
FTSE100 started the day at 6,462, just to drop in 5 minutes to 5,937. After that the day looked pretty steady with no great revelations but still FTSE100 finished the day at 6,016.05 -446.50 -6.91%, which is not a great end of the day. Same comes for the German DAX, with the Friday closure at 11,541.87 and finishing Monday with loses of -811.66 -7.03%, landing with 10,730.21. Not a greatest day for the Germans as well, with the best composite performer Beiersdorf AG 96.08 ,-2.70 ,-2.73% and worst Deutsche Bank AG 5.92 ,-0.85, -12.62%
And end of the Monday trade is a disappointing event for the trade stocks in US and Europe, leaving bruised US markets. The Dow Jones Industrial Average DJIA, -7.78% closed down 2,013.76 points, or 7.8%, at 23,851.02, while the S&P 500 SPX, -7.59% fell 225.81 points, or 7.6%, to end at 2,746.56, near its session low. The Nasdaq Composite Index COMP, -7.28% plunged 624.94 points, or 7.3%, to finish at 7,950.68.
All three indexes finished very close to a bearish market index which is indicated by a 20% drop from the recent peak. For this to happen, S&P 500 would need to end at 2,708.92, DOW at 23,641.14 and Nasdaq Composite at 7,853.74.
Some say this is a beginning of the bearish market. For sure this was a grim day for the trading in the face of 11 years bull market anniversary.
Vincenzo Francis Castle
CEO of Castle Bank