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“The most terrifying fact about the universe is not that it is hostile but that it is indifferent.” – Stanley Kubrick

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

US equity futures were higher earlier but have given up those gains (what else is new) as we approach the release of the February Non-Farm Payrolls report. Overnight and this morning, we’ve seen global weakness, although they haven’t seen nearly the level of weakness this week that US equities have. Germany and Japan were notable losers with declines of about 2%, while the STOXX 600 is down less than 1%. Treasury yields are lower as the 10-year sits under 4.25%

For the week, the S&P 500 is on pace for a decline of 3.6%, while the Nasdaq is on pace for a loss of over 4%. For both indices, this week is likely to be the worst week since the week ending 9/6, and for the Nasdaq, it will be the third straight weekly decline of 2%+, which would be the longest such streak since late July/early August of last year.

Certainty has been lacking lately, but efficiency has been abundant on the part of the market in pricing that in. The chart below is from page two of the Morning Lineup and shows the S&P 500’s 50-day moving average (DMA) spread, as measured in standard deviations. The S&P 500 has gone from firmly overbought to ‘extreme’ oversold territory in only eight trading days. These kinds of swift moves have been very uncommon over time.

It’s not just the S&P 500 that has moved deep into oversold territory. The snapshot below from our Trend Analyzer shows that as of yesterday’s close, every major US Index ETF except the Dow (DJIA) was at ‘extreme’ oversold levels (2+ standard deviations below their 50-DMA).