Without any consideration to the true wash-out the Coronavirus can end up exacting on the world markets, there is some rational thinking we can do with regard to support. The market is going to continue to go down, but this support level will keep it from going fully apocalyptic. If it breaks this support we'll see some real panic, but so far it's held. What we can see is that investors who bought at Trump's election and created the Trump bump will not want to lose their initial investments and will go cash if it drops too far below that.
For anyone reading this who is wondering just how much panic we're likely to see and is trying to take advantage of the current conditions, I would say to conservatively short the general market. The overnight injection clearly failed, and the Fed can't prop up the entire market for the duration of the health crisis. Manipulate a bit, perhaps, but single-handedly support? Definitely not, and they won't. This will go down. How far down will depend on institutional investors.
For anyone reading this who is wondering just how much panic we're likely to see and is trying to take advantage of the current conditions, I would say to conservatively short the general market. The overnight injection clearly failed, and the Fed can't prop up the entire market for the duration of the health crisis. Manipulate a bit, perhaps, but single-handedly support? Definitely not, and they won't. This will go down. How far down will depend on institutional investors.
Note
A look at the futures market through a similar lens:Note
Another way to look at this is that the Fed just throw a bunch of money into the market. This can't produce growth. It's completely artificial and that money will go directly to the people who have the presence of mind to sell under these conditions. It would've been wiser to use funds of that nature for economic stimulus more like what GWB did. The people who need the money for necessities will put it all back into the market. Investors will just take it.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.