Markets Seesaw After Fed Folly, Yield Drop

2020-03-03 | Simpler Trading Team

Bears, bulls, and bystanders were knocked about during a wildly volatile market session that saw the Dow jump early to more than +380 points before being ripped down to a session low of -997 points.

An unscheduled Fed rate cut of .5% mid-morning didn’t do anything to stem a market determined to fall for the day. Indexes briefly spiked following the rate cut announcement before a Fed press conference sent tickers tumbling again.

The volatile day was also shaken when the 10-year Treasury yield fell below 1% for the first time ever.

The Fed rate cut doesn’t bode well for the market outlook.

“An emergency rate cut has never saved the market. Never,” was the insight provided from John Carter, founder of Simpler Trading, in the online chat room. “Usually the markets pop up and then roll over and die a few days later.”

By midday John moved to a 100% cash position.

As the day moved forward with some direction, Simpler moderators worked trades with nimble caution.

It was a day to sit back and let the muddy waters clear on their own.

We Saw: wild moves up and down the spectrum — 

  • Fed cut rates with no help against market swings
  • Never before seen 10-year Treasury yield below 1%
  • Traders panicking as the market freaked out

We’re Watching: … what are the setups in this volatility, if any? —

  • Will a bullish trend emerge two weeks early in March?
  • Tickers ignoring volatility?: NFLX, RNG, GOOGL, SHOP
  • Sellers applying significant pressure

Discover more about trading volatile markets -- learn how the “squeeze” guides traders.