UPDATE ON THE BROAD STOCK MARKET (5:00 pm EDST)
It looks like the coronavirus (or now COVID-19) epidemic is turning out to be the "black swan" event (https://en.wikipedia.org/wiki/Black_swan_theory) many analysts have been speculating about recently that could take down (or at least severely damage) global financial markets. Are we witnessing the start of a major crash? Maybe, but so far the correction is around 18%. If equity markets can stabilize and find support here, we could see another rally begin soon.
All three major market indices (DOW, S&P 500 and NASDAQ) are most likely completing older medium-term cycles and taking their final corrective drops to their final cycle bottoms. Those bottoms could be forming now in our current reversal period (March 4 - 12) or they may continue down into the next strong reversal zone (March 24 - April 1). If forming now (or by this Thursday), and if the DOW can close this week above 25,000 (or even above last week's low of 24,681) then there is s good chance a new medium-term cycle will start and rally for at least several more weeks. But if this plunge continues into next week, it means the market is turning bearish and heading lower to complete its medium-term cycle at the end of this month. That would also suggest that a longer-term cycle is being completed which could lead to a final correction of 25 - 50 % (possibly more) from the all-time high of 29,406 on Feb. 12 into a 2021 - 2023 time frame.
But I am getting ahead of myself here. For now, we will watch for a medium-term cycle bottom this week. If we don't get it, we will look for it in the next reversal zone at the end of this month. We may attempt to go long (with a tight stop loss) if it looks like a bottom is forming, but we are not going to chase any short selling opportunities until it is clear the medium-term cycle bottoms are in. Still on the sidelines of the broad stock market.
It looks like the coronavirus (or now COVID-19) epidemic is turning out to be the "black swan" event (https://en.wikipedia.org/wiki/Black_swan_theory) many analysts have been speculating about recently that could take down (or at least severely damage) global financial markets. Are we witnessing the start of a major crash? Maybe, but so far the correction is around 18%. If equity markets can stabilize and find support here, we could see another rally begin soon.
All three major market indices (DOW, S&P 500 and NASDAQ) are most likely completing older medium-term cycles and taking their final corrective drops to their final cycle bottoms. Those bottoms could be forming now in our current reversal period (March 4 - 12) or they may continue down into the next strong reversal zone (March 24 - April 1). If forming now (or by this Thursday), and if the DOW can close this week above 25,000 (or even above last week's low of 24,681) then there is s good chance a new medium-term cycle will start and rally for at least several more weeks. But if this plunge continues into next week, it means the market is turning bearish and heading lower to complete its medium-term cycle at the end of this month. That would also suggest that a longer-term cycle is being completed which could lead to a final correction of 25 - 50 % (possibly more) from the all-time high of 29,406 on Feb. 12 into a 2021 - 2023 time frame.
But I am getting ahead of myself here. For now, we will watch for a medium-term cycle bottom this week. If we don't get it, we will look for it in the next reversal zone at the end of this month. We may attempt to go long (with a tight stop loss) if it looks like a bottom is forming, but we are not going to chase any short selling opportunities until it is clear the medium-term cycle bottoms are in. Still on the sidelines of the broad stock market.
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