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U.S. Stocks Could Fall Further With ‘Three-Day Rule’ in Play

Stock MarketsSep 07, 2020 09:18AM ET
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© Reuters U.S. Stocks Could Fall Further With ‘Three-Day Rule’ in Play

(Bloomberg) -- The selloff in U.S. stocks may have at least one day more to go if history is a guide, according to Fundstrat Global Advisors LLC.

The S&P 500 has fallen 4.3% over the last two sessions, though remains up 53% from its March lows at the height of fears about the coronavirus. The tech-heavy Nasdaq 100 Index fell 6.4% over Thursday and Friday. Given those substantive declines and the three-day Labor Day weekend, technical strategist Robert Sluymer says there’s a risk of a further downdraft.

“We would not be surprised to see the ‘three-day rule’ take effect,” Sluymer wrote in a note. “Steep selloffs often take at least three days to wash out the panic sellers.”

Nasdaq 100 futures were down about 1% as of 9 a.m. New York time Monday, while S&P 500 e-mini futures were little-changed.

The sudden back-to-back losses came after a ferocious run-up notable for a rare simultaneous increase in volatility, the outperformance of a few megacaps and unusually heavy options volume. Some strategists see it as simply a removal of froth, rather than a longer-term decline, while Fundstrat’s view remains unchanged that the recent drop is a healthy consolidation, Sluymer said.

The Nasdaq in particular tends to fall very rapidly from its peaks, according to Jason Goepfert, the founder of Sundial Capital Research Inc. So if it is really a top, there could be “an almost straight-down move in the weeks ahead,” he warned in a note Friday.

(Updates futures in fourth paragraph, adds deck headlines.)

©2020 Bloomberg L.P.

 

U.S. Stocks Could Fall Further With ‘Three-Day Rule’ in Play
 

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Comments (24)
Paul Proaño
Paul Proaño Sep 08, 2020 7:27AM ET
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sell, sell, sell !!!
Joshhua Ray
Joshhua Ray Sep 07, 2020 11:34PM ET
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marketing the sell off makes sense.
John Mars
John Mars Sep 07, 2020 6:37PM ET
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They won't after this article was posted...
okan korsal
okan korsal Sep 07, 2020 6:03PM ET
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Nasdaq futures is now in the green!
Indiana Jones
Indiana Jones Sep 07, 2020 6:03PM ET
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It makes absolutely no difference where the futures are trading. Let’s see where the market is at Tuesday’s close.
BiG DaDDy CK
BiG DaDDy CK Sep 07, 2020 2:15PM ET
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Conservatives, go half cash & half TQQQ. You’ll still become financially wealthy.
Mark Schufman
Mark Schufman Sep 07, 2020 2:15PM ET
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even 1/3 tqqq works!!
Mark Schufman
Mark Schufman Sep 07, 2020 2:15PM ET
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even 1/3 tqqq works!!
Indiana Jones
Indiana Jones Sep 07, 2020 2:15PM ET
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Please read the TQQQ prospectus. TQQQ is a DAILY investment vehicle meant for day traders. Holding it to “become financially wealthy” isn’t its goal, it’s to hedge. In fact, you stand an excellent chance that if you hold it, due to compounding, on many days it could go down when QQQ is up.
Gonçalo Coelho dos Santos
Gonçalo Coelho dos Santos Sep 07, 2020 1:39PM ET
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everything is green now except the nasdaq and that's only 0.4% down
Fomo Yolo
Fomo Yolo Sep 07, 2020 1:27PM ET
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hello
Sum Toast
Sum Toast Sep 07, 2020 1:17PM ET
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MARKETS ARE FAKE. MANIPULATED BY A PRIVATE CENTRAL BANK THAT SEEKS TO DEBASE OUR CURRENCY AND ENSLAVE US ALL. GIVE US BACK OUR GOLD AND SILVER. YOU FUNNY MONEY TICKS DON'T WORK ANYMORE, JEROME.
Kaveh Sun
Kaveh Sun Sep 07, 2020 1:17PM ET
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There is not enough gold. Gold will run out in a sec if we go back to the gold standard.
eddie glass
eddie glass Sep 07, 2020 1:17PM ET
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Kaveh Sun gold wont "run out", it will just be worth more. that is the amazing part of having a limited supply of something, and not just printing more and more worthless fiat. people have just gotten use to their money being worth less and less every year.
Dovydas Narkus
Dovydas Narkus Sep 07, 2020 1:17PM ET
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so this is a case of gold and silver price skyrocket!! anything which can be printed out unlimited levels will destroy economies sooner or later
Indiana Jones
Indiana Jones Sep 07, 2020 1:17PM ET
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People, even gold bugs, will sell gold just above 2000. Since it has no industrial use (outside of jewelry), it would take immense investing speculation to drive the price up much beyond 2100. It will take years for inflation to drive prices much beyond this, no matter what you might read. Or a US war with China.
Bradley Thomas
Bradley Thomas Sep 07, 2020 1:03PM ET
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Sweet, time to buy
dhmnts dhmnts
dhmnts Sep 07, 2020 1:03PM ET
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Contrarian 👍
Indiana Jones
Indiana Jones Sep 07, 2020 1:03PM ET
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dhmnts dhmnts “Contrarian” means to buy or sell at this point? I can make a case that it’s both.
Tyler Mynard
Tyler Mynard Sep 07, 2020 1:00PM ET
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This ticks me off to no end. Bloomberg are communist, anti american, and anti republican as they come. How dare you people spread fear like this
Fabio falec
falec Sep 07, 2020 1:00PM ET
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Hard to face the reality
Adrian White
Adrian White Sep 07, 2020 1:00PM ET
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Tyler, extreme markets are always about either fear of missing out, or fear of losing profits, and this is definitely an extreme market right now. This article simply quoted the opinion of one strategist. That is not "spreading fear". And please educate yourself on the proper meaning of communism.
Josh Nicholas
Josh Nicholas Sep 07, 2020 1:00PM ET
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Youre right tyler. Bloomber is fake news. Shoudl be labeled a ***organization
Hanna Christin
Hanna Christin Sep 07, 2020 1:00PM ET
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ok boomer
Tyler Mynard
Tyler Mynard Sep 07, 2020 12:58PM ET
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What a bunch of garbage by bloomberg
noob investor
noob investor Sep 07, 2020 12:54PM ET
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200 iq
Jiangxiao Qiu
Jiangxiao Qiu Sep 07, 2020 12:04PM ET
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this is useless at all. nothing really meaningful
Jiangxiao Qiu
Jiangxiao Qiu Sep 07, 2020 12:04PM ET
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this is useless at all.
perplexed76 .
perplexed76 . Sep 07, 2020 12:02PM ET
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today's no news rally contradicts
David Lousada
David Lousada Sep 07, 2020 11:54AM ET
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genius article..even a 6 year old could imagine that
Andy He
Andy He Sep 07, 2020 11:42AM ET
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Another useless article like so many...blablabla... Im sure if there are four days of losses...the "Five-Day Rule" is in play lmao
Mark Wahl
Mark Wahl Sep 07, 2020 11:42AM ET
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“Stocks go up. Stocks go down” 🤪
Vlad Lozovskiy
Vlad Lozovskiy Sep 07, 2020 11:37AM ET
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Maybe could, maybe not.  But if it hurts Trump then let's say they could.
eddie glass
eddie glass Sep 07, 2020 11:32AM ET
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Stocks could go up or down? Thanks for the insight. Stocks have been going up for the past 100+ years. It's not rocket science to make a guess they are more likely to go up than down.
Kaveh Sun
Kaveh Sun Sep 07, 2020 10:52AM ET
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They (Tom Lee) said bitcoin too 100k when it was max at 20k. They r nothing but cheer leaders. When it goes up, too the moon. When it goes down, earth is falling. They r emotion which mean they cant be traders. They make living by selling their services.
John Thompson
John Thompson Sep 07, 2020 10:51AM ET
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mango man just cancelled his golf weekend hahahaha
Ro Be
Ro Be Sep 07, 2020 10:37AM ET
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Why is the headline not in quotation marks? It's just an assumption made by someone.
Eric Rice
Eric Rice Sep 07, 2020 10:21AM ET
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Money shift and profit taking, marked by stubborn & outdated analysts who once again failed to get in on last 2 runups trying force down. BTD
Pratt Man
Pratt Man Sep 07, 2020 9:55AM ET
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how can anyone honestly justify a 40 pe on already highly profitable Apple and Microsoft? Profits will have to double just to get their values in line.
unknown territory
unknown territory Sep 07, 2020 9:55AM ET
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It doesn't matter what their profits are. You guys don't get it. 0% intererest rates with the biggest stimulus package ever. This is not billions that was put into the economy its trillions. I don't think you guys know how much a trillion dollars is. The market is gonna go back up. People came back from vacation and took profits. It happens every single year. Its nothing new. This market will be at all time highs next year. 3 day rules and covid nonsense. Its 2020 you guys need to grow up and learn basic math or don't invest.
Hanna Christin
Hanna Christin Sep 07, 2020 9:55AM ET
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unknown territory  I'm sure the guys at Fundstrat Global Advisors will think your feedback is invaluable...
Jeremy Williams
Jeremy Williams Sep 07, 2020 9:55AM ET
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Give me apple at 40 over tesla at 1000
Indiana Jones
Indiana Jones Sep 07, 2020 9:55AM ET
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unknown territory Thanks for the “lesson” in markets, but it’s condescending, rude and obnoxious.
 
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