U.S. Stocks Could Fall Further With ‘Three-Day Rule’ in Play

Joanna Ossinger, Bloomberg

(Bloomberg) -- The selloff in U.S. stocks may have at least one day more to go if history is a guide, according to Fundstrat Global Advisors LLC.


The S&P 500 has fallen 4.3% over the last two sessions, though remains up 53% from its March lows at the height of fears about the coronavirus. The tech-heavy Nasdaq 100 Index fell 6.4% over Thursday and Friday. Given those substantive declines and the three-day Labor Day weekend, technical strategist Robert Sluymer says there’s a risk of a further downdraft.


“We would not be surprised to see the ‘three-day rule’ take effect,” Sluymer wrote in a note. “Steep selloffs often take at least three days to wash out the panic sellers.”


Nasdaq 100 futures fell as much as 2.1% in early Asian trading Monday.

The sudden back-to-back losses came after a ferocious run-up notable for a rare simultaneous increase in volatility, the outperformance of a few megacaps and unusually heavy options volume. Some strategists see it as simply a removal of froth, rather than a longer-term decline, while Fundstrat’s view remains unchanged that the recent drop is a healthy consolidation, Sluymer said.


The Nasdaq in particular tends to fall very rapidly from its peaks, according to Jason Goepfert, the founder of Sundial Capital Research Inc. So if it is really a top, there could be “an almost straight-down move in the weeks ahead,” he warned in a note Friday.


This article was originally published on bloomberg.com


3 views0 comments
  • Facebook
  • Twitter
  • LinkedIn
  • Instagram
  • YouTube

Risk Warning:
Past performance of an investment is no guide to its performance in the future. Investments, or income from them, can go down as well as up. You may not necessarily get back the amount you invested. All opinions, news, analysis, prices or other information contained in our communication and on our website, are provided as general market commentary and do not constitute investment advice, nor a solicitation or recommendation to buy or sell any financial instruments or other financial products or services.

© 2021 Trade Forum Philippines. All rights reserved.