Stock-market plunge ‘starting to feel a bit ridiculous,’ but don’t argue, says chart-watcher

It doesn’t pay to fight the tape, but the stock market could be poised for a big-time rally once the current selloff subsides, a veteran chart-watcher said Thursday.

“This move lower is starting to feel a bit ridiculous, but we try not to argue with Ms. Market,” said Mark Arbeter, president of Arbeter Investments, in a note. “If and when this thing turns, we should see some rip-roaring rally.”

A relentless six-day selloff pushed major indexes into market-correction territory on Thursday, defined as a drop of more than 10% from a recent peak. The move was attributed by investors largely to fears over the rapid spread of the COVID-19 virus outside of China. The Dow Jones Industrial Average DJIA, -4.42% ended the day with a loss of nearly 1,200 points, or 4.4%. The S&P 500 SPX, -4.42% dropped 4.4%.

In a phone interview, Arbeter told MarketWatch that the early push off the session lows had been encouraging, with the S&P 500 finding support after briefly trading below its 200-day moving average at 3,046.91. The 200-day average is seen as an important gauge of an asset’s longer-term trend.

But while the move had raised hopes for a low, the S&P 500 extended losses in a late selloff to end near 2,978.