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Stock Markets Holding the Ackman Lows?

Bill Ackman, CEO of Pershing Square Capital Management and well-known hedge fund manager. (Photo: Screenshot via CNBC)
Bill Ackman, CEO of Pershing Square Capital Management and well-known hedge fund manager. (Photo: Screenshot via CNBC)
Bill Ackman, CEO of Pershing Square Capital Management and well-known hedge fund manager. (Photo: Screenshot via CNBC)

New York, N.Y. (PPD) — Mid-trading day Wednesday, well-known fund manager Bill Ackman appeared on a widely viewed financial news network with an epic, emotionally charged rant, pleading for the most draconian, martial law-on-Steroids prescription at the national level.

This rant, concluding with “Hell is Coming!” went on for maybe close to 15 minutes. His message — from someone who alleges to be not only a responsible adult, but a Billion Dollar fund manager — had obvious market impact.

In short order the market spiralled lower; first, triggering the 15 minute Market Wide Circuit Breaker at -7% on the S&P 500 cash. Upon reopening, stocks continued lower until ~2:30 pm. The last 90 minutes of trading saw a rally of over +5%, including nearly a 1000 point recovery for the DJIA.

The Wednesday intraday lows, courtesy of Mr. Ackman, of DJIA 18,920 and S&P 500 2,280.50 will be know for years, maybe decades, as the #AckmanLows.

The Dow Jones Industrial Average (^DJI) managed a gain of +188.27, or +0.95% to close at 20,087.19, reclaiming the benchmark 20,000 level.  While the ~+1% gain appears meager at best, the DJIA had threatened the 19,000 level during sharp declines in the first 30 minutes of trading.

The remainder of the trading day saw a range of over 1,250 points for the Blue Chip average. After settling much much closer to the day’s highs than lows, market watchers were frankly thrilled with the morning reversal off the “Ackman Lows” from Wednesday.

The S&P 500 (^SPX) settled at 2,409.39, a gain of +11.29 or +0.5%. Never mind the modest gain, for the second day, the index rallied off intra day lows to close above the December 24, 2018 close of 2,351.10.

Should the S&P 500 continue to hold both 2,351.10 on a closing marker, and the intraday “Ackman Low” of ~2,280 from Wednesday, that declines of ~-30% in a month are enough to establish a tradeable level, at least in the near term.

The Nasdaq Composite (^IXIC) built on its relative strength from Wednesday with a gain of +160.73, or +2.3% to close at 7,150.58. We’ve seen numerous comments this week that FANG and related companies in the digital space are likely to fare slightly better during a “Virus Shakeout” and that theme has gained a bit of support the last couple days.

The Russell 2000 (^RUT) was clearly the outperformer Thursday, and it was overdue. The small cap benchmark gained +67.58 points, or +6.8%. On Wednesday, the Russell posted it’s lowest close; 991.16 since the February 12 2016 close of 971.99.

On February 20, the Russell closed at 1,696.07. Wednesday’s close marked a -41.5% decline for the Russell 2000 in 19 Trading Days!! Time for some Mean Reversion!!

The Early Line

Stock index futures are projecting a higher opening later this morning after stocks rallied off the #AckmanLows yesterday.

Throughout this selloff, stocks have struggled to hold early openings that gap higher. We will have very high volumes both on the opening and in the last 15 minutes of the day, courtesy of a quadruple expiration of stock options, stock index options and stock index futures.

There is no doubt investors would be thrilled with any positive price action to end the week.

Written by

Street Vision is the blogging pseudo-name for a high-profile analyst with 30+ years of experience in Equity Capital Markets. Beware of aberrant cynical commentary.

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