So, last week was horrible if you had monies invested in stocks. We experienced an absolutely horrible selloff in the markets. So the question to be asking your financial adviser is, “can the markets stop the bleeding this week”? There is almost zero chance we will be a “rebound” this week (unless a cure for the Coronavirus is rumored). However, in my professional opinion, there is a good chance the markets could stop its downfall this week. And here are my reasons why I believe this:

1. Joe Biden has a chance of winning Super Tuesday

2. The Fed may announce a surprise rate cut this week of 50 basis points

3. The markets need to defend a “technical” level

4. Window dressing

The first two reasons could move the markets with their “headlines”. There is no real technical reasons they would help, except for bringing some certainty back to the markets. Just as the headlines moved the markets down last week, they have the potential to move them up this week.

Coronavirus is still going to move the markets (up or down). As I write this, the first case of the virus may be in my hometown of Sarasota, FL. And that is all anyone can talk about. And if you don’t believe the virus has changed people’s behavior, go try to buy some hand sanitizer from your local Walmart. Or see if Amazon Prime can deliver it to you in 2 days or less.

The third reason listed above is more technical in nature. Those that follow charting patterns of the markets will tell you that last week’s selloff was brutal from a technical level. The S&P 500 (which I chart daily for our clients) broke through it’s 50 day moving average AND its 200 day moving average. I don’t remember when we have fallen through both moving averages in the same week. This usually takes time with a prolonged sell off. So, last weeks sell off was massive and swift.

As this week progresses, the markets will try to claw its way above the 200 day moving average. If this can happen Monday or Tuesday, then some calm will come to the markets as it will artificially set a floor. If the 200 day moving average cannot be breached Monday or Tuesday then there will be another steep selloff as the “quants” (computerized trading) reprogram their algorithms and push the market downward into a Bear market (20% or more in declines). So, I expect to see more buyers on Monday and Tuesday to try and push the S&P over its 200 day average. If this happens, then the markets may stabilize.

The final reason is what we in the industry call “window dressing”. Let me let you in on a dirty little (well known) “secret” of the financial industry. Most mutual fund companies voluntarily publish their holdings at the end of every month. In order to make their portfolio look good, they will sell off stocks that performed really poorly or had bad headlines the previous month. This is so you don’t see those holdings disclosed and trade your current mutual fund for another one (in case you were paying attention to their holdings).

At the beginning of the month, the fund managers will buy what they want in the portfolio, regardless of what you think of the stock. This act of making their holdings look good for the month end is known as “window dressing”. And the buying portion of the window dressing will occur this week and give a little boost to a falling stock market.

With all that said, this will be an interesting week and will set the tone for how the month of March will progress. As I instruct all my friends and family that ask me what to do at times like this, I impart the same wisdom, “take care of yourself”!

Let me explain. I am currently writing this blog 36,000 feet in the sky on my way to San Diego for a conference. The first thing I did when I sat down was to pull out my Clorox travel wipes. And I wiped down everything! And when my seatmate sat down next to me, I offered him one. And he wiped down everything.

In an effort of both of us trying to get rid of germs in our space, we just made it a little better for those that sit here on the next flight. Because we were taking care of our self first.

So, if the past couple of weeks is more than you can bear, talk to your adviser. Get the answers that are right for you. Then, take the action that is right for you. Not right for someone else.

Only you know your financial situation completely. You are the only one who is 100% vested in your future success. So, if you don’t find the right answers, call around.

Or go to our new FAQs section on our website and ask me a question. I will post the answer “live” to our site. Your question may help someone else with a similar question. So, the act of you taking care of your self may help others.

Just like my Clorox wipes in row 15 on United 995!

Stay confident my friends!

-KTC