A look at the technical picture shows support levels and possible bounce points to watch on each of the indexes.
S&P 500
The S&P 500 is right on support. Technically, one would expect a bounce here. But to where is hard to say. This is a severely stressed chart and a recession is at hand.
Also, the bond market is still dislocated. Yesterday the Fed announced more Repos and stocks declined 12%.
Dow
The Dow Jones crashed right through support. The next level of support would take away all gains since Trump was elected.
Nasdaq 100
The NASDAQ 100 is the strongest of the three chart. It is still well above the first level of support, unlike the first two charts.
High Yield Spreads
Spreads are blowing out. If that continues, there either will not be a stock market bounce or any bounce will be short-lived.
Run On the Banks?
I was asked about that yesterday. I do not believe it is an issue, at least in any meaningful way. There is $1.6 trillion in excess reserves at banks.
Might there be a shortage of physical $100 bills caused by panic? Yes, but that is not the same as a capitalization issue right now.
Might we have a problem later? Yes, but this is not 2008.
Unemployment Claims
Unemployment claims are one thing to keep an eye on as Danielle DiMartino Booth accurately pointed out.
Question of the Day
That's what everyone wants to know but it is not knowable, now or ever, as I responded.
We can say that stocks are still way overvalued and earnings will crash. Some may dispute that, but stocks were priced for perfection waiting for a needle to prick the bubble and the coronavirus obliged.
The key chart is not any of those I posted but rather the credit spreads charts that Bianco posted.
Troubled Sectors
The airline industry, travel businesses, and oil sectors are in miserable shape, All of them want bailouts.
And what about the workers in those industries?
In Emergency Meeting, Fed Fires All Its Bullets in a Single Shot
I commented on Sunday, In Emergency Meeting, Fed Fires All Its Bullets in a Single Shot. The Fed can provide liquidity, but this is not a liquidity issue.
With so many living paycheck to paycheck, and much of the rest with only a 2-month cushion for emergency expenses, any recovery is likely to be a feeble one.
There will be no remedy from the Fed for lost wages. Loans to businesses will not help consumers at all.
We have had a 12% down day and a 10% down day over these concerns. A 10% up day was sandwiched in between.
The emergency repos and rate cuts by the Fed are not going to do much. As we have seen already.
All in all, expect more downside, even if there is another short-term bounce.