Well, Tuesday was quite eventful. Tuesday morning the Federal Reserve had an emergency cut of 50 basis points in the Fed Funds rate. The Fed blamed the COVID-19 virus as the reason for the emergency cut, but we can now be sure that the Fed is realizing that our economy is slowing and so is the global economy. The intent of the 50 basis point cut is to keep the market afloat. Unfortunately, they can't go at this alone and right after the rate cut was announced the market drifted lower. We have been speculating that this might occur, and IF it did prior to our 2802 support level on the S&P 500 being hit, it could spell trouble for this bull market.
All of our clients were positioned to weather this market turmoil prior to the market break. We are now taking advantage of the downside. We believe there is a very distinct possibility that this market breaks much lower in the coming days/weeks. We may see some whipsaw movement, but the trend is now down. We can always buy back into the market, but with VIX as high as it is and the technical damage that has been done to the markets, it's time to move assets to safety, weather this storm, and try to take advantage of any opportunities that present themselves.
We will keep you updated with any changes to our analysis.
If you'd like to learn more about our Forecast Scorecard, please click on this link: Forecast Scorecard Report 3.2.pdf