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Despite unprecedented stimulus from the Federal Reserve last night, US and global equity futures are trading limit down while US Equity Index ETFs are trading down roughly 10%. In fixed income markets, which were extremely stressed last week, conditions have shown some signs of not getting any worse, but major problems remain as the US economy and economies of countries around the world have essentially clogged to a halt.
Read today’s Bespoke Morning Lineup for a discussion of all the Fed’s moves, the troubling increases in Covid-19 cases in Europe, and a look at how the FOMC’s actions have impacted credit markets.
The chart below is from page two of today’s Morning Lineup and shows where sectors finished off last week relative to their trading ranges (as measured by standard deviations below their 50-DMA). The circle shows where each sector most recently closed and the tail shows where it closed a week ago. Finally, the boundary for each sector is three standard deviations above or below their 50-day moving average.
Even after Friday’s monster rally in the final minutes of trading all but one sector (Technology) was at least two standard deviations below its 50-DMA. With US equities on pace to open down by roughly 9% today, many of these sectors will likely be going off the charts once again.