The markets plunged Monday, with the Dow falling nearly 1,600 points in the largest intraday point decline ever. This "February 2018 market crash" caused us to look back at some of the more recent historical market moves.
The sell-off that followed the positive January employment report on Friday should not have been a surprise. It was the typical market reaction to strong economic news during the early stages (relatively speaking) of a tightening cycle. Positive economic news could be inflationary and push the Federal Reserve into a more aggressive tightening phase.
The S&P 500 settled at 2607.75 and has lost 7.6% since Thursday’s close. Today’s session stalled at a high of 2763, and failed to hold the key level at 2757, a trend line and Friday’s close. Price action began cascading below the overnight low of 2733 and all bets were off once our rare major four-star support at 2690-2700 was taken out.
Is this the beginning of a deeper selloff or just a short-term shake out? Lets first step out of the forest to see the trees; the S&P 500 is still up 3% on the year. What caused last week’s selling? It's difficult to pinpoint one main catalyst but here are a few. First and foremost, we discussed a trend line on last Monday’s Morning Express at the 2850 area which would be critical to keeping this immediate-term uptrend intact.