EarningsBeats.com Digest for March 13, 2020
Dear EarningsBeats Digest Member,
We will be hosting an impromptu webinar TODAY at 1pm eastern, which is available to all of our members. During the session, Tom Bowley, Chief Market Strategist at EarningsBeats.com will address the following:
- Discussion of extreme historical sentiment readings and their relationship to stock market prices
- Brief market analysis, including our major indices
- Q&A session
If you would like to join us for today's session, as well as next week's exclusive Max Pain Monthly Webinar, you can sign up for a 30-day trial of our service. We will send out today's room instructions to members later this morning.
VIX Closes at 75, Nears Highest Closing Reading Ever
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Relative strength will be a very important topic again soon, but for now it's all about extreme sentiment. Traders are now treating our major indices like there's little hope. Deep despair psychologically marks THE most significant price bottoms. It's when price that you couldn't fathom a week or two ago is hit. It's when the proverbial "kitchen sink" gets tossed in. In the history of the Volatility Index
($VIX), yesterday's close of 75 has been topped on only three occasions.
November 20, 2008: 80.86
October 27, 2008: 80.06
October 24, 2008: 79.13
March 12, 2020: 75.47
November 19, 2008: 74.76
That's the list. So we're currently up there with the most fearful period this century - the 2008 financial crisis. As you can see from the list above, we had multiple daily VIX readings at or above 75 over a one month period back in 2008. We can't possibly know how this period of extreme volatility and panic selling will end, but history tells us we're closer to the end of it than the beginning....and it's possible we're
at the very end of it. That's not to say that the news won't get worse and the feeling of despair won't get worse, but the stock market has a way of heavily discounting company valuations based on worst-case scenarios very, very quickly, and that's what we've seen over the past three weeks. Here's a visual of the long-term S&P 500 chart with a 5 day SMA of the VIX on a panel beneath the S&P 500 price
chart:
In addition to extreme VIX readings, we also are seeing extreme equity only put call readings ($CPCE) that everyone should be aware of. I've decided that it would be appropriate to have a "Trading Places LIVE - Special Session" webinar for later today at 1pm EST for EarningsBeats members. I want to make sure that all of you understand where we are in the midst of all this fear on a contextual basis.
It will be a discussion of extreme sentiment, followed by a Q&A session. I know this is a very difficult market period for all of us, and a lonely one, so coming together and discussing it could be great therapy for everyone. I hope you can make it. If not, the session will be recorded and you can listen to it later at your convenience.
To join us for the session and receive access to the recording, simply click the button above to sign up for a free 30-day trial (there will be an initial $7 charge with a full refund within 5-10 business days).
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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