Investors of DIREXION SHARES ETF TRUST DLY GLD MINERS IDX BEAR 3X (DUST) are seeing a 15% jump after a 60% drop in share price from recent highs. It appears that gold prices are coming back, which makes sense because it is theoretically inversely related to the stock market.
>For traders looking to find something inverse to gold, this was a great play. Unfortunately the market is just too risky for most investors to buy. Buying DUST stock right now is like racing a Porsche on a frozen lake because of the crazy. Today the markets are up slightly, and gold is up.
Stocks plunged to start the week with the S&P 500 drop-ping 11.98% on the session as the coronavirus continued to spread while investors were unimpressed with the response from global governments and central banks.
Trading was halted Monday as the opening bell was still ringing on Wall Street, with stocks down high single-digit percentage points after U.S. equity futures spent all but 15 minutes of Sunday night’s electronic session limit down. The massive selloff came despite the Fed cutting rates back to the zero bound and restarting QE to help ease liquidity concerns in the Treasury market. The central banks of South Korea, Japan, Australia, and New Zealand all took accommodative action leading up to the market open yesterday. Still, the moves failed to comfort, much less impress, investors enough to spur any meaningful rally.
Negative coronavirus headlines dominated the news yesterday as the number of new confirmed cases continued to surge higher. At the same time, the long list of canceled events, reduced flights and cruises, and increasing trend of self-quarantining weighed heavily on the outlook for the U.S. and global economies. To that point, multiple data points out of China, where the outbreak has been primarily contained, showed economic activity plunged by the most in decades in the first two months of the year. That suggests the worst is yet to come for the world’s biggest developed economies, including the EU and the U.S., where the case count is rising most rapidly.
he S&P 500 made new lows after trading was halted, but it quickly bounced back to recover about half of the morning’s declines. The rally notably faded when S&P futures approached the level where they went limit down late Sunday, and the broader market rolled over into the afternoon. The major indexes zig-zagged lower and took on a more massive tone late in the day as Trump held a press briefing with the Coronavirus Task Force during which he said the “worst of the outbreak could last until August.” The president stopped short of requesting a voluntary self-quarantine but did say gatherings of 10 or more should be avoided. None of the comments were overly comforting, or suggested the government is any closer to containing the outbreak, which left stocks to make new lows into the closing bell.
Get ready for another wild ride today. Here are the quick points:
- US Equities Fall 12%; Close Near The Lows of The Day
- Only One Stock in SPY has a Bullish Rating
- Even Bond Proxies Came Under Relative Pressure
- Flight to Safety Aids Consumer Staples
- Futures Trade Limit Up But Pare Gains Through the Morning
U.S. stock futures, in a volatile overnight and Tuesday morning session, reached their 5% “limit up” levels, but at one stage, plunged briefly negative before recovering. The Dow Jones Industrial Average was looking to open up more than 400 points after Wall Street saw its worst day since the 1987 “Black Monday” market crash.
Investors are still focused on coronavirus. Yesterday, US President Donald Trump allowed the country to roll into recession if the pandemic lasted until August. At the same time, the market is encouraged by the intention of the administration not to suspend the operation of stock exchanges. Finance Minister Steven Mnuchin said open markets are a “sign of trust” for people, and trading closing could increase anxiety and panic. February data on US retail sales released today was negative. The indicator fell by 0.5% instead of the expected growth of 0.2%.
Cramer calls the swings in futures a “total joke.”
Despite the Federal Reserve’s emergency coronavirus measures, the Dow plunged nearly 3,000 or 13% on Monday. Ahead of Tuesday’s trading, the Dow was off more than 30% from last month’s record highs, far exceeding the bear market threshold of down at least 20% from recent highs.
Eight major financial institutions, including Morgan Stanley, Goldman Sachs and JPMorgan Chase, are borrowing money from the Fed, according to The New York Times. Central bankers urged them to tap its short-term funding facility to make it easier for credit to continue flowing through the economy.
WTI crude oil prices continue declining, testing a local low at 29.00.
The situation with the volume of oil production in the future, after the actual cancellation of the OPEC+ deal, remains in the spotlight. The day before, the head of Saudi Aramco, Amin Nasser, stated that the company would accept a price of USD 30 per barrel or even lower. The April delivery plan is 12.3M barrels, well above 9.7M barrels per day under previous agreements.
In the main arbitrage position of the spread between WTI and Brent, a historical situation is brewing when the difference in quotes is leveled to zero. The last time a similar situation was observed in May 2016, after which the spread in the instruments reached USD 10. Each similar convergence of the spread has always been accompanied by a subsequent spurt in oil prices. Such situation is possible this time.
Tom, aka T Rex, is seasoned financial pro that cut his teeth on the Chicago trading oil futures in 1995. In less than 3 years he bought his own seat and set up shop on the exchange. For the next 10 years Rex traded his own account and some institutional accounts. In 2017, he decided to move to Florida and focus on educating traders and writing for financial websites.