The major averages ended Friday with a broad-based retreat that caused the market to turn negative for the week. The S&P lost 1.1%, ending the week lower by 1.0%, while the Russell 2000 (-1.6%) underperformed today, but ended the week in-line with the benchmark index.
For background on today’s market dive, we must start with the overnight session when a widespread outage took all Bloomberg terminals offline, which prevented large investors around the globe from communicating with their peers.
I used Bloomberg most off my trading life. You would be amazed at how it is used other than for data and information. Everyone is on Bloomberg and that’s how they communicate. It’s a lifeline for institutional players and hedge funds, so you can understand what happened.
Bloomberg may have been responsible for the early weakness, but lets be honest, the market never caught a bounce today.
The outage was followed by a plunge in Hang Seng and China-linked futures after China Regulatory Commission announced plans to ban margin financing for over-the-counter trades while also increasing the number of stocks eligible for short selling to 1,100. Today was a very big risk off day for China and the etf that gets you short China stocks (FXP) popped over 8% today. Europe and the U.S. markets joined in the selling.
As you can see below, the SPX broke that mini uptrend (white line) today. The 100 day moving average is about 10 points below today’s low print. It will be interesting to see if this is the start of yet another mini pullback or something greater. Of course this could be a blip and we rebound on Monday. That’s what makes it fun. We don’t know.
I will out be out with the weekend video, so I will see you then. Have a great weekend.
Joe