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The Standard and Poor’s 500 Index (SPX) closed Friday at 2972, virtually unchanged from Monday’s opening at 2974. Friday’s price action was interesting, to say the least. SPX opened at 2954 and plunged to a low of 2902 in the first few minutes – that was scary. But the index slowly recovered and then largely chopped sideways through the balance of trading until 3:09 pm ET. At that point, SPX had touched the earlier intraday low, and in the remaining 51 minutes of trading, the index gained 69 points or 2.4%. That bullish spurt late Friday afternoon was very encouraging. First of all, the intraday low of 2856 from February 28th was tested but not reached. Secondly, a day of trading that began as a rout, ended very strongly. This was an excellent sign for next week’s market. Was this the capitulation we were waiting for?

SPX trading volume remained above the 50-day moving average (dma) all week and spiked upward on Friday, booking 3.9 billion shares, the largest trading volume for the week.

VIX, the volatility index for the S&P 500 options hit an intraday high of 49.5% on February 28th, as we set the low (so far) for this correction. VIX spiked up to 54.4% this past Friday during that initial plunge in the morning, but then settled down to 41.9% by the close of trading. Was that the high point for volatility in this correction?

IWM, the ETF based on the Russell 2000 group of companies, closed Friday at 144.40, less than a point above the intraday low of 143.91 on February 28th. Friday’s intraday low hit 16.5%, overturning the previous correction low of 15%. Similar to SPX, IWM recovered much of its early losses Friday, but it wasn’t as strong of a recovery signal as we saw with SPX.

The NASDAQ Composite index closed Friday at 8576. Intraday trading broke the 200 dma at 8417, but NASDAQ quickly recovered into the close. Trading volume was above average all week and spiked upward in the recovery Friday.

As you know, I have been skeptical of the hype surrounding the possibility of a coronavirus pandemic. Late this week, I began to see calmer voices bravely entering the discussion. I say bravely because each common sense reminder is met with hostile resistance. This incident is further evidence of the deterioration of the American people’s strength since the “Greatest Generation” that endured World War II. According to the CDC, 18,000 people have died during this flu season and this year is tracking to be much less lethal than last year’s flu season, which claimed 80,000 lives. Did you miss that headline? 80,000 deaths. About half that number die each year on our highways. I am confident that coronavirus deaths in the U.S. will be less than half of this season’s flu victims.

I am more and more convinced that the fear of a coronavirus epidemic has been greatly overblown. We will see the run on toilet paper, drinking water and hand sanitizer decline over the next few weeks. If that were the end of the story, it would be simply an illustration of the tendency of our media to generate dramatic headlines, create hysteria and get everyone tuned in for the next breathless news update. Unfortunately, that isn’t the end of the story.

This irresponsible scare mongering has resulted in tangible economic consequences. A friend of mine works for a multimedia marketing company, and he tells me the cancellations of March and April trade shows has pulled their revenues back to 2008 recession levels. The global supply chains are already showing signs of healing, but many of these losses cannot be recovered. It will leave a hole in our economy. There are several signs that today’s market price levels are oversold. Traders are trying to estimate the effects of this economic disruption and price equities appropriately.

As I pointed out last week, markets normally retest the correction lows at least once before recovering. Friday’s price action was in line with that pattern. But we aren’t out of the woods yet. My advice remains the same as last week: Be cautious and nibble at some favorite stocks at bargain prices, but trade small. Even if the market opens strongly and trades higher on Monday, be cautious.