UPDATES AT BOTTOM….last one Morning of March 9
February 27, 2020 – I know, I am one of the few people that enjoy market declines. But, I have always said I was born to deal with Bear Markets. Bear Markets are when you invest for the upcoming Bull Market.
I was just thinking last week that nothing could stop this market and when I have always had those thoughts a top would occur. Many indicators were at extreme readings and sure enough this decline was likely to occur.
Gold is in a toppy range because it started to move $50 a day. Gold tops occur when gold gets very volatile. This isn’t to say a move into the $1700s cannot occur. Just saying that the time for a top has been activated.
As for the market, let me try to make this very clear – this decline is NOT about the coronavirus. The stock market reflects social mood about events 6 months in the future – not today! The first two quarters of 2020 should be just fine for companies. The question to answer is what has spooked the market about July-September of this year???
The first thing that came to my mind was when is the Democratic National Convention occurring. That is July 13-16th. Who can be nominated that would shock the markets? Wall Street would clearly be worried if Pocahontas was nominated – and wins in November. I am not so sure they are worried about Bernie Sanders. Maybe they are worried about a Sanders/Warren ticket? Regardless of what will occur this Summer….just know that it will occur and it will be shocking. So, unlock the masses, don’t be shocked when it occurs….whatever ‘it’ will be.
As for a dead cat bounce rally in the markets, today’s low was 25,752 in the DOW 30. It is likely a lower figure will be hit on Friday since the markets closed at their lows. Wherever this temporary bottom occurs, a rally of at least 1500 points should occur. That is a minimum. I can tell more once that rally is finally underway.
In the interim, hold on tight. The November Election will have a larger effect on the market than the coronavirus. Around April or May the markets should telling us how the Election will play out.
And don’t forget about 23,377 I discuss in a prior post. 10 days ago that seemed out of play. All of a sudden, it is a figure to keep an eye on.
As for the beer virus, educate yourself as always. Over 16,000 (maybe as high as 48,000) Americans have died this Winter already from the flu!!! Coronavirus has been around since the 1960’s. Lysol cans say it kills coronavirus (maybe not this new strain). This is nothing new. We do not have vaccines for ALL of the flu strains. We simply guess at what ones might appear this Winter. But, the strains we guess wrongly on will hit the masses. Why would it be different with coronavirus.
Wash your hands and cover your mouth – simple logic for all of the time. Oh, and don’t buy masks. They won’t help at all. Not even professional medical masks will help (unless you are a professional who knows how to wear them….and they say even then, it would have to be worn all of the time). The Fake News Media always has an agenda. Almost always that is a bad Agenda. As always, educate yourself and ignore whatever the Fake News Media says.
UPDATE Evening of February 28, 2020 – That was a week for the ages! Simply beautiful to look at the charts.
Today proved the masses wrong that think when stocks go down, gold goes up. Gold had its worst day since 2013. When people panic they sell everything….except T-Bonds which they run to for security. T-Bonds are at record highs. Which, of course, means there is only one way to go:)
It is doubtful today’s low of 24,681 is the low for this initial move. But, if it is, a counter trend rally should carry to the 26,500-27,700 range. But, first we have to see if Friday’s low hold. Should be another interesting time next week, volatility will start to subside.
UPDATE Evening of March 2, 2020 – Well, the largest declines in history were followed by the largest rally in history today. In one day, the DOW rallied to the target range noted above and closed at 26,703. The markets do in a day or week what used to take months and years. Amazing to watch.
Although I think most of this rally has already been achieved, I believe the market will become range bound for a week or two. We need to simply settle down and let all of the indicators get back to being meaningful. Time needs to unfold for awhile and projections will become fine tuned. I am not a buyer at this time. I want to let some time pass by and see where we stand.
As an aside, the markets are telling the Fed to cut rates by 75bp. I suspect a 50bp cut will occur first as the additional 25bp might come into question over the next week or two. 100% of the time the Fed takes action AFTER the market has already made its move. The Fed has NEVER taken preemptive action.
Update Evening of March 5th – The trading range is occurring. My initial target of 27,100 has now been hit almost to the dollar twice in the past few days. No way I am thinking that will be the top of this rally. The market is too volatile. With more days in the books, it looks like 27,500 to 28,100 is a good range for the top of this rally to occur. The scary part is when this rally ends the subsequent decline should be more than 5000 points. I would say 8000 points would be likely. That would tell me that come the end of Summer and beginning of Fall the markets expect a Trump loss to be a sure thing. We shall see how this plays out.
More people died in the Nashville tornado than the coronavirus has killed in America. Just a total joke to even be talking about the beer virus. Godspeed to those in Nashville.
Update Morning of March 9th – And it looks like the 8,000 point decline is underway. Hard to believe my projection of a top at 27100 was almost to the dollar. But, oh well, I will wake it. The Dow is down almost 2000 points at the opening. That is what is called Wave 3 of 3 and the maximum velocity down. Usually it means we are half way to where a bottom might form. As I write, they just closed the markets for a 15-minute break. This is the 1929 and 1987 Crashes all over again.
I went in to energy stocks big time this morning with oil down 25% today. I will wait to invest more in a different industry once we start forming a bottom. Buy on panics not at bubble tops. Enjoy the ride folks. Be patient.
19,100 is the early target for this 3rd Wave decline.