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A Bird's Eye View Blog

Fireside Charts: Resistance Levels, the Calming Bond Markets, and Struggling Small Businesses

By:BCM Investment Team | Date:Mar23, 2020 | Category: Equity, Economics, Market Highlights, Fireside Charts

As stocks come off their worst week since 2008, Washington's failure to produce a stimulus package and the spread of increasingly strict containment measures are putting increasing pressure on global markets. The S&P 500® Index broke through downside support and is now down over 30% from it's all time high on February 19th. It's got quite a way to travel until hitting its next "resistance level" though—could it reverse course before it hits? Small and Mid-Caps have already blown past that mid-1800's level, experiencing a 40%+ drop from their print high on February 20th. A heavy tech-composition in the age of Netflix, Zoom calls, and working from home seems to helping prop up the Nasdaq 100 at least, but is it sustainable? And while tech is showing some resilience and the bond markets look to be catching a much-needed breather, a look at American employment numbers reiterates just how important those small and mid-size businesses are to our economy. Finally, while we're fully settled into the newest bear market... could its partially event-driven nature differentiate it from other previous bears, potentially indicating a slightly more optimistic outlook going forward?

 

 

1. Many chartists would say the next resistance level is in the mid-1800's for the S&P 500...

 

s&p 500 composite

Source: The Chart Store, as of 3/20/20

 

 

2. Mid Caps and Small Caps have already fallen to these levels. Will the market hold at support?

 

S&P 400

Source: The Chart Store, as of 3/20/20

 

 

3. However the tech-heavy NASDAQ and NASDAQ 100 are, so far, still in their bull market up channels.

 

nasdaq 100

Source: The Chart Store, as of 3/20/20

 

 

4. Margin calls and other selling pressure has triggered yields to temporarily spike in certain areas of the bond markets, causing the Fed to intervene. Bond markets, via yield, seem to be calming down again...

 

3 month libor and 3 month UST

Source: The Chart Store, as of 3/20/20

 

 

5. This is why it is crucial for the federal stimulus package to include SMID sized companies...

 

small and medium business us economy

Source: WSJ Daily Shot, from 3/20/20

 

 

6. Please support your favorite local businesses through their time of need!

 

restaurants struggling

Source: WSJ Daily Shot, from 3/23/20

 

 

7. When this turns, will it be a v-out?

 

stock pricing vs bonds

Source: WSJ Daily Shot, from 3/23/20

 

 

8. Some hopeful signs from history:

 

types of bear markets

Source: Eventide Asset Management, from 3/12/20

 

 

The constant flood of headlines and ever-evolving analysis of the situation have made it difficult to get a comprehensive view of how exactly this pandemic could affect the markets and our financial futures. For BCM's analysis, click below to watch a short video by Portfolio Manager and Managing Partner, Dave Haviland.

 

Special Video Update:  Coronavirus and the Market

 

 

 

 

 


Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.