Historical days on Wall Street, not only because in a short time the Dow Jones recorded two of the most aggressive falls ever, yesterday and last Thursday the third and sixth most significant devaluations, but also because the volatility has been absolutely stunning, with daily variations of almost 10% in reverse in the last two sessions and with variations on the day unsuitable for cardiac patients, I would even say little advisable to anyone who does not have a heart of steel. On Monday, for example, after an initial drop of more than -12%, the Bulls still tried to pull the market for almost two hours, achieving a recovery of up to half of the maximum opening losses.
However, at the entrance of the lunch hour, the pessimism returned in a double dose and the Bulls capitulated, the North American indices started a well-defined downward movement and without much contestation until the end of the day, leading Wall Street to close at the minimum of the session with falls between -12% on the S&P500 and -13% on the Dow Jones, truly mind-blowing. The performance of the smaller capitalization companies that in Russell 2000 yielded more than -14%, in other words, the red of the main indexes was no longer loaded due to the lesser weakness of the heavyweights, which limited the damages a little. In terms of sectors, retailers of essential products, a typical safe haven, were the ones that lost the least value with a slide of -7%, while on the other side were real estate agents, curiously also a group usually sought after for their safety, but given the underlying conditions of the crisis was the one that most felt the selling pressure with a devaluation of -16.5%.
For the next few days, the watchword remains caution as I have mentioned last week. The earthquake that hit Wall Street is still far from being resolved, this does not mean that the market cannot fall further, not least because we are in the territory of the Bears, but the most certain is that the volatility will dominate for a few more weeks, giving time for long-term technical indicators to better understand the medium-term scenario, as in the economic component Trump yesterday opened the door to a possible recession in the US this year.
