So, did we really faced a bear market during that corona crisis? Or isn't it much more of a big, very big, pullback? A classical pullback does not break all kind of support levels, but an outrageous *spike* does. This is how I see this crisis: Nothing but a negative 1,5-month spike for now. We are facing a bull trend, ever since we reached the maximum drawdown. No range at that time, nore L or U pattern. Much more like a V pattern. Why is this so, and why are so many traders and investors confident? I think this is easy explained: a) People were still bullish, as they are used it. Good stocks for low prices - that had its impact. b) All realize that it is nothing but a flu, still a dangerous one, for which people have not been prepared. - But now they are! During the peak of corona virus in asia, South-Korea and Taiwan neither shut down their economy nor had a huge lock down. Why? Because they were wearing masks by default, already used to it. And obeying distance rules. While in Europe and America, people were still celebrating and not taking it seriously. Now that corona has hit that much, people are totally sensitive for it. Most are holding distance and many wearing masks. 3 things must be true, so the Virus ends: - enough masks and keeping distance - enough test-kits for those, that get sick - a tracking app, like it is common in Australia So, this is something that is already on his way, and can be fulfilled. It is just a matter of time (weeks). Why, should Dow Jones or S&P 500 remain far down below all time highs, if this pandemic is already on its way to be solved? However, debt, deficit, unemployment, will play out negatively on the economy... We will most probably see some sort of W pattern, but no one can say when exactly. [Maybe now? Take a close look at the DJ/ SP Chart ; ] Edit: I am already short on both. I think it is good for the economy, if we see now a W - a lower second pullback than the first - so that in a few weeks, when measures take place, we can go back to full bullish mode ;
A retailer explaining world economy on a Metatrader 4 chart, E*Trade opened 330.000 new retail accounts in Q1 and everyone bought stocks....sell everything you have. Can you figure out how much the Dow pulled back after the first crash? Can you compare that to the current situation in the S&P? We're not even 2 months in the greatest recession since WW2, the US has 25% unemployment rate. Can you tell me how this is going to translate into a bull market? By the way. People tend to forget that this is not a crisis caused by corona. The markets were already done and right on the edge of the 8-12year economic cycle. Did you forget about the repo issues and the overleveraged housing and car consumer market. Corona was the trigger, not the cause. If you think that everything goes back to normal once they found a vaccine, then you probably also think that the great financial crisis of 2008 could have been avoided by bailing out Lehman.
It's not Mt4, it's Mt5 my friend... (and btw: I don't show my full chart-analysis; just random window.) Yes, you are probably right: The market was at its end... But from todays perspective, all time high look very lucrative. You seem to forget, that a) there is always a (fundamental) reason, when DJ and S&P are on all time highs - I don't think that this was a bubble, although I must admit I could not imagine them to climb even higher. b) very important: this is a flu - people can Do something about it. So, why shouldn't many stocks go back to 'normal', while some - that's true - would get into a bad range (entertainment, food, all that has to do with customer spending). "The markets were already done and right on the edge of the 8-12year economic cycle. Did you forget about the repo issues and the overleveraged housing and car consumer market." - Well yes, but just the imagination of old all time highs has its own potential ...
It is a bear market until we make new all times again, new all time highs in all the indicies, S&P NDX and Russell, Dow.
The Euro crisis is not over. If interest rates should spike bankruptcies will soar. Today it is J.Crew. It is the same old story leverage kills.
..."until we make new all time highs again" If you wait that long, I think the bull market might be over again ; That's true, but what can we take from it? Until now, everythings working. Germany said no to euro-bonds, Italy has, as it seems, enough liquidity to overcome the crisis on its own... Why should the ECB rise i.r., when it has more than one painting machine ... Btw: I must change my outlook from 1st post. I think there is a range forming; I would now only scalp and go for small tp. This is a very important level we are at now.
Will you be eating meat next week? next month? The food chain is breaking down in the US as meat plants are shutting down. In life there there are tripping points. Tipping points can be small and seemingly inconsequential when they happen. Tipping points are only recognized in hindsight.
That is easy to say when many stocks are double and triple off their lows. That is very nice fat middle to trade as in paraphrasing Bernard Baruch I didn't make my money by buying the lows or selling the highs but trading in the fat middle.