Stocks Tumble On Recession Warning

Hello traders everywhere. Stocks fell sharply on Wednesday giving back all of Tuesday's gains after the U.S. bond market flashed a troubling signal about the U.S. economy. This move ignited fears that a recession may be on the horizon for the U.S. economy.

The DOW was down more than 600 points and is down over -2.3%, meanwhile the S&P 500 slumped -2.3% and the Nasdaq sank -2.5% on the day.

The yield on the benchmark 10-year Treasury note Wednesday broke below the 2-year rate, an odd bond market phenomenon that has been a reliable indicator for economic recessions. Investors, worried about the state of the economy, rushed to long-term safe-haven assets, pushing the yield on the benchmark 30-year Treasury bond to a new record low on Wednesday.

There have been five inversions of the 2-year and 10-year yields since 1978, and all were precursors to a recession, but there is a significant lag, according to data from Credit Suisse. A recession occurred, on average, 22 months after the inversion, Credit Suisse shows. And the S&P 500 enjoyed average returns of 15% 18 months after an inversion before it eventually turns.

The last time this key part of the yield curve inverted was in December 2005, two years before the recession hit.

Key Levels To Watch This Week:

Every Success,
Jeremy Lutz and

5 thoughts on “Stocks Tumble On Recession Warning

  1. Sounds like a lot of bedwetters here, like reading cry baby Libs on Fox comments blog because no one else will let them talk. Trump inherited a big fat mess. If you know how to read charts, then read charts. If you know about Precious Metals, then trade Precious Metals. If you think you know something about everything, go home or win an election.

  2. Thank you Mr trump. I hope this opens up more eyes of the American people. You're full of hot air and are about to blow up.

    1. You sound like a lot of hot air. Have you been short for 3 years? maybe time for you to go long if you're expecting a recession.

    2. I agree that Trump is causing economic problems. I don't like him because he has tools to help the middle class, but won't. The Democrats have nothing to offer. The problem is not the parties, but government in general. Government is never for the governed, it's for the government. The charts are OK, but they can't tell you the future because they reflect the recent past. Nary a word about the fundamentals. Supply and demand are no longer relevant. Observe the futures market for commodities. Now it's virtually all cash settlement. Trading what doesn't exist. I am not claiming to be a timer, but I think the Trump government will do all it can to make everything look rosy for the election.

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