Watch the levels
One of the paradoxes is markets is that when the news is moving fastest, technical analysis is the most important. When the newsfront is quiet, fundamentals are more important.
Coronavirus news is coming from everywhere at the moment and the market is trading more on emotion and fear than anything rational. This time, that's rational because coronavirus is truly scary for both individuals and the global economy.
But fear can turn into greed quickly, especially in a market where central banks are determined to keep equity prices high.
The main thing at a time like this is to control risk by defining levels that matter. I don't like looking to oversold/bought indicators when a sea-change is at hand but I do like looking at levels -- especially major ones on major assets.
I have been highlighting the range in 10-year Treasury yields for weeks and it was the break lower on Friday that foreshadowed today's rout in risk trades. By the same token, the 2016 low of 1.318% now looms.
Another one to watch is the 2020 low in the S&P 500. That's close to where we bounced today.
Yen crosses are in a tricky spot because of the squeeze last week but AUD/USD and EUR/USD are more straight-forward. Watch USD/CAD as well because it will breakout to the upside in a quick move to 1.35 is the situation worsens.
