Market Sell-Off Was “Overreaction,” Says Avatrade

Market Sell-Off Was “Overreaction,” Says Avatrade

Yesterday, the US market saw its worse sell-off in two years due to fears that emerged about the Coronavirus spreading. However, Avatrade have stated that traders should not be too concerned about these numbers.

Although Avatrade has been somewhat pessimistic about the role of the Coronavirus and what it might do the global economy in the past, they changed their tune when discussing the huge market downturn in the US market yesterday. In what was a massive hit on the market, the Dow Jones dropped 1000 points or 3.56%, the S&P500 fell 3.3.5%, and the NASDAQ was the worst hit with the index dropping by close to 3.71%.

However, this was perceived by a member of the Avatrade team as simply “market participants overreacting” to the news that the virus has spread and that while this market turndown was expected, it should not have dropped by such a significant figure. Instead, they explained that they did “not see any significant reason as to why the Dow Jones should plunge over 1000 points, as there is nothing new about the on-going virus. The fact is, that the way investors were acting yesterday made the situation look like a pandemic” in one of their latest blog posts.

In fact, on the contrary, the platform has asked whether it could be a market opportunity for those looking to counteract the sell-off and benefit from it. Although, it might not be as clear cut as this and they have drawn attention to a few important market signifiers that could better explain whether for investors it is indeed an opportunity and if so, which areas of the market they should have a look at investing into. The two areas of which to look into in order to answer this is volatility index and gold.

This two “risk-off” instruments saw impressive jumps yesterday while the rest of the US market saw its drop. The VIX saw a 46% increase means that it crossed above the 25 mark for the first time since nearly 14 months ago. Meanwhile, European equity volatility also surged with Euro Stoxx 50 seeing an increase by as much as 47% irrespective of the current volatile European market that has looked in dire straits over the last couple of weeks.

As per Avatrade, “the fact is, nothing significant occurred yesterday which caused both of these indices to surge the way that they did”. They note that only when the VIX index hit the 35-mark, last seen in December and February 2018, and this is considered to be a “fear number” and that it reached this 25 mark back in August but then quickly recovered. Gold, on the other hand, saw no strong price action and the closing price was essentially the same as it began. While, today, “we are not seeing any upward move. I think it is likely for the gold price to retrace a little or consolidate before the upward momentum takes off again.”

All of this combined means that it does indeed look like investors overreacted yesterday and that there is no need to be concerned about the situation just yet. This also means that in regard to whether there is an opportunity to invest the answer is not yet. With the platform stating, S&P500 index crosses back above the 50-day moving average on a daily time frame, then this could be the opportunity that investors have been waiting for. However, if the price fails to cross above the 50-day SMA, then it is likely for the price to touch the 100-day SMA.”

Therefore, keep your eye on the market and ear to the ground, for now, at least.

Recently Similar News

casinoin-promotion etoro-promotion

Latest Guides

Latest News

AvaTrade,CFD Trading Platform,Investment,Trading

CFD Platorm’s Cite Oil As This Weekend’s Important Asset

Two CFD trading platforms have drawn attention to the value of oil and explained why it should be on the savvy traders shopping list this weekend. Both AvaTrade and have shared similar sentiments about the need to get involved with oil as the price is currently its lowest in 20 years. Oil’s price has […]

4 April, 2020
Binance,Exchange Platforms,Promotion

Win $1,000,000 at Binance Futures

Binance Futures has launched a new trading tournament where a prize pool of up to $1,000,000 worth of BNB tokens is up for grabs. This will be the second tournament that the platform has launched for their expanding project following a similar event taking place in January. This one is set to launch next week […]

3 April, 2020
Crypto Wallets,Promotion,Trezor

Last Day To Save 15% on Trezor Wallets

Trezor’s STAYSAFE Promotion is set to end within the next 24 hours.   If you have missed both of our two news post so far about the on-going promotion at Trezor where traders can save 15% when buying either one of their top quality hardware wallets – the Trezor One or the Trezor Model T -then […]

3 April, 2020
CEX,Cryptocurrency,Exchange Platforms,Investment

MATIC To Be Listed on CEX Next Week

The Indian-based project, MATIC is set to be the latest listing on the exchange platform, CEX with full trading to be in place by the end of next week. The listing will be somewhat of a world first in that it will make CEX the first and only platform in the world where you can […]

2 April, 2020
BitPanda,Cryptocurrency,Exchange Platforms

BEST Rewards Now Live At BitPanda

BitPanda has rolled out their new BEST rewards concept where players can earn up 12.78% of additional BEST every year. The new reward scheme will see the exchange platform give out these rewards to any trader who buys and holds the platform’s native token, BEST, in their wallets. On a monthly basis, the platform will […]

2 April, 2020
IQ Option,Trading

Learn Tips and Avoid Mistakes With New Guides from IQ Option

IQ Option have released two new guides that deal with two opposite ends of trading behaviour. These two new guides from the platform are the latest in a long line of guides that the platform have been busy rolling out in recent weeks. Some of these guides have focused on techniques, while others have focused […]

1 April, 2020
CFD Trading Platform,Exchange Platforms,Investment,Trading

XTB Offering Close Only on USFANG Stocks

XTB will be temporarily only offering the option to close three USFANG related assets. The changes will be affect USFANG and USFANG+ and USFANG all of which no new open positions will be made available until further notice. This means that if you are looking to start trading these then you will not be able to […]

1 April, 2020
Crypto Wallets,Promotion,Trezor

Trezor STAYSAFE Promotion Still Live

Last week, we let our users know about a coronavirus-orientated promotion where users will be able to save money on Trezor hardware wallets. There are now just a few days left for traders to get involved The deal will allow traders who want to purchase either the Trezor One or the Trezor Model T with […]

31 March, 2020