The Stock Market Is Dropping Again. How to Spot a Bottom. By Ben Levisohn Updated March 6, 2020 11:52 am ET / Original March 6, 2020 8:00 am ET Text size . Spencer Platt/Getty Images 8:55 a.m.Oh look. Thestock market is dropping again. Do you need me to tell you the reason? Of course not. At this poi nt, we all know that the coronavirus is rattling the stock market. As the number of cases keeps growing, the disease continues to spread to new countries, and Seattle schools close, the market is engaged in a near-futile attempt to predict just how devastating coronavirus will be, both in terms of our health and for the economy. “It’s another ugly morning as futures are down sharply on the same issue as Thursday: The growing spread of the coronavirus and fears of a larger economic slowdown,” writes The Sevens Reports’ Tom Essaye. “There was no notable, new news overnight, but the virus continues to spread in the U.S. and the number canceled travel plans and conferences/events continues to grow.” In moments like these, I often turn to the charts to help me gauge the possibilities, at least from a markets point of view. As I noted earlier this week, when the swings are this big,they don’t mean much—it’s the ranges and levels that matter. And the S&P 500 is coming very close to a level that needs to hold: 2990. FlooredThe S&P 500 needs to hold support near 2990 on Friday.Source: SPXSupportFeb. 10Feb. 17Feb. 24March 22900300031003200330034003500 That would be the bottom edge of support for the index, according to Fairlead Strategies’ Katie Stockton, which sits between 2990 and 3030. When I talked to Stockton on Thursday, she told me she was waiting to see if the market could hold 2990 at Friday’s close before recommending investors buy stocks. If it holds, the S&P 500 could be headed toward resistance near 3200. If not, it could fall toward 2750. “That’s quite a spread,” she said. “The wait and see approach is appropriate.” And the drop could be even worse than that. MRA’s John Kolovos is watching the S&P 500’s August lows—just above 2800—and he thinks a break will cause a drop of at least another 5% from there—with the growing possibility of a bear market. That would take the index down to around 2630, a 22% drop from its Feb. 19 peak. That’s particularly true given that we have so little to go by. We know the disease is spreading, but even in China, where coronavirus seems to be under control, the economy has been slow to restart.Starbucks(SBUX), for one,provided an update last night that second-quarter sales in China will be 50% below what they were the previous year, even as it aid that it expects the hit to be temporary. “I have been of the view that we are operating in a post crash environment, one that required a retest of the last week’s low, one that had a heightened risk of making new lows and even the prospect of a bear-market was on the table,” he writes. “It appears the market is testing said lows now and I can’t stress enough how important those lows are.” So perhaps the best we can do is look to the market to tell us how worried we should be. When it calms down, maybe we can all relax. The Dow Jones Industrial Average has dropped 551.27 points, or 2.2%, to 25,570.01, while the S&P 500 has fallen 2.6% to 2945.24, and the Nasdaq Composite has slumped 2.8% to 8499.76. Write toBen Levisohn atBen.Levisohn@barrons.com https://www.barrons.com/articles/st...for-a-hint-its-safe-to-go-back-in-51583499623
I believe 3200 is totally out of question for 3 reasons Earnings results will be pushed down GDP will be reduced with a possible recession 6-12 months out And last but least people losing complete hope with the federal reserve. The way they cut 50 basis points at non fed meeting just shows you how desperately naive they are to continue to listen and bow to wallstreet. Wallstreet now expects more rate cuts straight into mid 2020 totalling almost a full percentage point leaving absolutely no where to go but negative when the recession and big bear market comes roaring in. The only thing that could quickly turn this market around is a full recovery of this virus epidemic, if numbers start to drop dramatically that will be the only thing that can save equities, the fed is helpless at this point unless from rumors I hear that they may just buy stocks outright which of course would be just another ridiculous ploy and ludacris fix to keep the everlasting fake bull market running higher. Seems like there is no such thing as free markets and this past week with fed cutting rates was a perfect prime example. Let's see how much magic the fed has left because negative interest rates is something that no one would have ever imagined......
It was 3100 just on Wednesday Fed maybe naive but they can print. And they nurtured this market for 10 last years coming to rescue every time after 5% drop. We can believe China says or not but they have basically extinguished this thing in a month It may return or not but now basically they are back to normal in just one month Ok. They might have -5% growth this month. But they will just throw more stimulus Now USA. Ok it may continue for 2-3 months instead of 1 month. USA will lose several thousands of its citizens who were already half dead Then USA will emerge with zero interest rates, significantly weaker dollar, huge fiscal stimulus and QE 100 bln. How long will it take to get to 3200? It might be at 4000 by the end of the year By the way - looking at Costco - consumer spending going up big time
4000 is very very very far away. 2000 before 4000 if this pandemic isnt settled by June.... The fed wont be able save the market this time...especially during a global recession, as interest rates around the world go completely negative QE is all we hear about, only way to artificially prop up markets and economy. Without it this world economy is worthless.....and consumer spending might be up at costco but not so much in the rest of the industries consumers usually spend in. Cosco may be the only bright spot but costco isnt the entire market so dont be surprised by s$p 2500 or lower in the coming months.
Crude is getting hammered from a collapse in demand. Saudi's starting a price war. Travel destinations shut down. No one is going to be traveling. Mass quarantines, border closures, outright panic, airline revenue collapsing, tourism industry routed. Global equity markets cannot bounce back because vol is back in a very big way. Layoffs coming. I suspect debt problems in eurozone banks and corporates will ultimately lead to downgrades by Moody, S&P. Flight to bunds, while Goldman says 2020 will be a flat year for global GDP. Macron says an epidemic in France is 'inevitable' right as Italy initiates mass quarantine of 16 million including Milan and Venice. Virus spreading in Iran, India, Australia, Korea, Japan, and across EU. It's going to get worse before it gets better IMO.
Debt problems in eurozone banks and forget about it. The entire system is going to collapse..no rate cut or central bank intervention will be able to hold it off...as I said for many years the next collapse would make the 2008 financial crisis look like it never even happened