Premium OP: Global Pandemic Reaches New Highs

Market Review

S&P 500 Futures: NY Has Over 60,000 Cases Of #CoronaVirus

The ES traded 2528.00  on Friday morning’s 8:30 CT futures open, rallied up to 2545.50 and sold off down to 2505.25  in the first 18 minutes of trade. After the low, the ES traded up to 2545.50 and sold off back down to a higher low at 2515.00 at 9:38 am. The ES then short covered up to 2558.50 and then sold off back down to a double bottom, higher low at 2532.50 at 10:32 and then rallied up to a lower high at 2547.25 and then sold back off down to 2523.50. The ES then rallied back up to the 2533 area and sold back off to the 2517.50 area. After the low, the ES traded back up to 2547.75, pulled back down to 2536.75 and the ES then rallied up to 2553.00 going into 12:03 and sold off down to 2532.75 as Nancy Pelosi spoke before the final budget vote, rallied a little, pulled back and then traded up to 2569 12 minutes after the budget bill was approved. After the ‘pop’ the ES sold off down to 2544.50 and then rallied up to 2570 just before 2:00. 

At 2:00 the ES traded 2573.00 and at 2:13 traded up to 2590.25, pulled back down to 2577.00, back and filled to 2584.00 and 2590 for a few minutes and traded 2605.00 at 2:27 then traded back down to 2545.50 at 2:48. The ES traded 2547.50 at 2:50 as the final cash imbalance showed $2 billion to sell. On the 3:00 cash close, the ES traded 2533.00, traded down to 2518.75 at 3;13 and settled at 2524.25 on the 3:15 futures close, down 95 handles or -3.63% on the day. 

In terms of overall tone, the ES gave back 50% of Thursday’s gains and I think it could have been worse. In terms of the day’s overall trade, total volume was even lower than Thursday’s 2.33 million with only 2.11 million futures traded. When you take out the 500,00 from Globex only 1.6 million contracts traded on the day session.  

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MiM

The MOC was 1.7B to sell and the market accelerated into the close.  Our reliable 3:30 pm ET buyers have suddenly been turning into sellers going into the closing period.  Our 3:50 pm candle was about 20 points. The MIM paired off quite quickly and we slid sideways into the close. 

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Our View

It’s a beautiful day in Delray Beach Florida, its 84 degrees with bright blue skies but the famed Atlantic Avenue is deserted, the beaches are closed and the only thing that’s open are the grocery stores and the doctor’s offices. Oh, and you can go out for a walk if you have a dog. Just about two months ago when the world got wind of the coronavirus most people, including the president, were saying the virus was ‘‘just the flu’ but that’s not what he or the world is calling it today. I do not pretend to be the smartest man on the block but I knew this was going to get bad and as of last night, there were a total of 720,480 cases worldwide with 33,917 deaths and only 150,920 recovered. Active cases total 535,642, with 508,856 having mild conditions and 26,778 serious or critical. Here is the Worldometer link which has jumped sharply in the last few days: https://www.worldometers.info/coronavirus/ Despite President Trump saying ‘help is on the way’ there continue to be shortages of basic medical supplies such as protective medical masks across the US. In New York, the epicenter of the virus, there are over 60,000 cases and doctors and nurses continue to be exposed. It was just last week when President Trump was saying he wanted to start ‘getting people back to work’ by Easter but now he is saying the lockdown may continue for a ‘few more weeks’.  Yesterday White House health adviser Dr. Anthony Fauci said the country could see up to 200,000 deaths and millions of infections, though he cautioned that nothing is certain. My guess is Dr. Fauci’s guesstimate is on the low side. The virus that didn’t ‘affect’ young people now has 20% of those hospitalized in the US 20-44 years old. An infant in Illinois who tested positive for COVID-19 has died, the state’s governor said at a press conference on Saturday. This marks the first recorded death in the US of an infant who contracted the virus. A full investigation is underway to determine the baby’s cause of death. 

I, like many, are trying to stay positive but it’s hard to do when there is such a torrent of bad news. The chart below shows the virus peaking in 15 days but it also shows what the shortage of hospital beds and ICU shortage is. I hope it’s correct but there are several new ‘hot zones’ are opening up like in Louisiana. Despite the rise in cases hundreds of worshippers attended church services. I don’t know if they are just uneducated people or just do not understand the severity of the virus spread.

As Americans, we enjoy many freedoms other nations do not enjoy. I understand that it’s hard to stay at home. Constantly being around family members that are all cooped up is extremely difficult, to say the least. To further that I am not sure that this won’t happen again next ‘flu season’. I really believe our way of life has been changed forever and if we do not all work together the coronavirus will wreak havoc in our society for many years. I am really in a state of shock. I go to bed worrying about my family and friends and I wake up every day asking how could this be happening and where did we go wrong? I wonder about the economic consequences. I don’t worry so much about a crash, we are already in the midst of that!  I don’t worry about a recession either, I worry about a 1929 style depression with millions unemployed, unable to pay for medicine and food. I also wonder how long the government can continue to wildly print money and run up trillions of debt with no way to pay it back! I’m sorry if I am a bummer today but I just don’t think the public fully understands the full seriousness of the virus and the long term economic implications.

Our view, oil fell under $20.00 a barrel and the ES that traded up to 2605 Friday afternoon traded down to 2445.00 after Globex opened last night. I do not doubt the futures can rally, I just do not think they will hold. I can not call for new lows on the ES right now but it will come. As for today? I think you sell the rallies but I think it’s possible Tuesday, the last trading day of the quarter, could see some late day buying. If that doesn’t happen and the ES closes at or near the lows this could be a very bad week for the S&P. As for crude oil, I think the next area of support comes in at 18.00, 16.00 and then 15.00. 

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