How Far Will The Market Fall?

[waterbottle]

Yes, this is a risk that needs to be accounted for but I personally think the bigger risk would be a loss of opportunity.

 

[aus_trader]

Has there ever been a V-shaped recovery?

Yes there have been quite recently actually. The unknown drop in late 2018 had a beautiful V-shaped recovery and went onto make new highs as nothing ever happened. When there is no clear reason, stock market commentators and news web sites make fancy guesses at what caused it, like 6 reasons for the drop



Here is the V-shape that happened, text book style:


Current situation is different. Even if there are no new infections and restrictions are lifted, it'll take a long time to get the economy to run at full steam. It'll also take a mighty rally to make it a V-shaped recovery to get ASX All Ord's back to over 7000.

I don't know what'll happen but I think a perfect V-shaped recovery like the late 2018 through to early 2019 is unlikely. Based on current trajectory, a V-shaped recovery means back to top before the end of this year, which I doubt. It may take quite a few years to make new high's. In the meantime chartists here can have some fun predicting the future : slowly grind up, go sideways for ages, slowly grind down or Zig-Zag up and down with massive volatility till traders have thrown in the towel.

 

[MrChow]

I think we'll see a rally peak by end of month at around 5800 and then a long hibernation period between May-October where the market will dip but basically end up flat for this period.

Then if there's good news in terms of technology and therapeutics which allows the secondary waves to be contained on an individual / group basis rather than mass shutdowns then the market could make another move up the 6000s during November-January.

 

[aus_trader]

I think we'll see a rally peak by end of month at around 5800 and then a long hibernation period between May-October where the market will dip but basically end up flat for this period.

Then if there's good news in terms of technology and therapeutics which allows the secondary waves to be contained on an individual / group basis rather than mass shutdowns then the market could make another move up the 6000s during November-January.

That's the slow grind up scenario, which I think has better odds unfolding, given the level of uncertainty.

 

[waterbottle]

I think we'll see a rally peak by end of month at around 5800 and then a long hibernation period between May-October where the market will dip but basically end up flat for this period.

Then if there's good news in terms of technology and therapeutics which allows the secondary waves to be contained on an individual / group basis rather than mass shutdowns then the market could make another move up the 6000s during November-January.

That's the slow grind up scenario, which I think has better odds unfolding, given the level of uncertainty.

I would agree with a slow grind up, purely based on the fact that governments are trying to sustain an economy that businesses are trying to evolve into

 

[moXJO]

Dow seems to be chomping at the bit. All this stimulus money and the "Rah Rah" nature of the yanks dying to get back to work. Then we have this new treatment on top. Fear has disappeared.
Sentiment feels like a coiled spring right now.
I did not expect the market to jump that high

 

[Bazzi]

That's the slow grind up scenario, which I think has better odds unfolding, given the level of uncertainty.

The link below is interesting read and seems more pessimistic than the mentioned here

https://www.livewiremarkets.com/wir...lows-the-bigger-question-is-what-happens-next

 

[Garpal Gumnut]

There is a vigorous mug's rally afoot.

gg

 

[finicky]

@ Bazzi Yes, interesting link, hadn't considered the 1987 'short sharp shock' as another possible 'road map'

Either way we should see a retest of lows within weeks:
"In 13 of the previous 15 sharp corrections in global equities, the market retested its lows several weeks after the initial low. Don’t be surprised if that happens and it will happen quickly." Chris Watling Longview Economics

From the article:

 

[aus_trader]

There is a real risk of a 2nd wave if USA tries to force itself out of the slow down by opening everything up again too soon. Trump got it wrong this time and could get it wrong once again if all he cares about is growth at all costs.

 

[Dona Ferentes]

Dow seems to be chomping at the bit. All this stimulus money and the "Rah Rah" nature of the yanks dying to get back to work. Then we have this new treatment on top. Fear has disappeared.
Sentiment feels like a coiled spring right now.
I did not expect the market to jump that high

quite so.
.....yanks dying [when they] get back to work ?!

 

[Garpal Gumnut]

In the presence of

• 1. Many knowns and unknowns of all four types
• 2. Many opinions
• 3. No consensus
• 4. Good health thus far
• 5. Sufficient water, food, a roof and sex.

I have elected to sit on my hands rather than do anything in the market.

I may be wrong.

Who knows?

gg

 

[Smurf1976]

There is a real risk of a 2nd wave if USA tries to force itself out of the slow down by opening everything up again too soon.

I have this in mind definitely as a possibility and being associated with a sharp decline in the markets either to re-test the lows or, more likely in my view, to new lows.

What I'm less confident about is how the ASX would perform in a scenario where the US goes to hell whilst Australia and NZ have contained the virus to the point of re-opening things?

Do we get caught up in the global sell off and go down hard?

Or does Australia become an obvious "safe haven" to the point that we could even go in the opposite direction?

 

[Dona Ferentes]

Or does Australia become an obvious "safe haven"?

Despite the global inter-connectiveness, or maybe because of it, the 'economic contagion' is inescapable. But if we manage to get through, and manage a rebound, with our institutions and economy intact while other states fail, another consequence will likely be "Pandemic Refugees".

 

[moXJO]

Need a trigger event imo. Either earnings reports or deaths running away in the US. Perhaps some sort of diplomatic row with China. The other thing we have to think about is inflation I suppose. Interest rates ain't going up anytime soon. Plenty of money being printed off. Last time the gfc rolled around didn't the US $ get lowered in the years after.

Won't every country be trying to inflate away this mess?

 

[Smurf1976]

Either earnings reports or deaths running away in the US. Perhaps some sort of diplomatic row with China.

Looking at those three examples, I'm thinking that it would be something of a miracle if at least one of them didn't occur in the not too distant future and we may well see all three.

I'm thinking it's a "when" not an "if" thing but that's impossible to prove until it happens or doesn't.

 

[aus_trader]

Trigger events are all there just haven't filtered through with the earnings numbers.

Rather than taking the US index as a whole I decided to look at the whole market to see what was really happening. Not just looking at the Advance/Decline ratios to get a quick assessment of how many companies are going down vs how many going up but the whole back breaking task of flicking through 5000 to 6000 odd companies and ending up with a massive headache. Don't believe me ? Have look a few posts above and see the posts I made at 7am in the morning. That was the stock research night shift ending after starting on Friday evening.

I have learnt so much from ASF that it's my absolute pleasure to contribute my findings to fellow members. The market rebound is led mainly by just a few big cap leaders such as Microsoft, Amazon (already breaking out to the upside and making new high's), Facebook, Google, Apple and a few other tech stocks joining in. The wider market hasn't rallied with them. Most are down near the low's or have a small rally or even making new lows after only a miniscule rally. So the Index rally is really due to a few select stocks that make up the bulk of the weightings such as the FAANG stocks.

This is somewhat in contrast to the Aussie stocks, where the smaller speculative stocks have rallied hard including tech stocks such as APT. However the biggest weightings of the Index which are the big4 banks have not rallied back up.

Rather than the financial media theories in the news sites, I wanted to see the facts in front of me.

 

[aus_trader]

I forgot Netflix, that is also breaking out to all time high's. Fair enough too I guess in this case, as it's one business that could benefit in this situation as people are stuck at home watching all the Netflix movies and shows.

 

[sptrawler]

I forgot Netflix, that is also breaking out to all time high's. Fair enough too I guess in this case, as it's one business that could benefit in this situation as people are stuck at home watching all the Netflix movies and shows.

The video rental shop we have used for ever, closed last month, guess it means the PVR will get a workout. Lol

 

[OmegaTrader]

Trigger events are all there just haven't filtered through with the earnings numbers.

Rather than taking the US index as a whole I decided to look at the whole market to see what was really happening. Not just looking at the Advance/Decline ratios to get a quick assessment of how many companies are going down vs how many going up but the whole back breaking task of flicking through 5000 to 6000 odd companies and ending up with a massive headache. Don't believe me ? Have look a few posts above and see the posts I made at 7am in the morning. That was the stock research night shift ending after starting on Friday evening.

I have learnt so much from ASF that it's my absolute pleasure to contribute my findings to fellow members. The market rebound is led mainly by just a few big cap leaders such as Microsoft, Amazon (already breaking out to the upside and making new high's), Facebook, Google, Apple and a few other tech stocks joining in. The wider market hasn't rallied with them. Most are down near the low's or have a small rally or even making new lows after only a miniscule rally. So the Index rally is really due to a few select stocks that make up the bulk of the weightings such as the FAANG stocks.

This is somewhat in contrast to the Aussie stocks, where the smaller speculative stocks have rallied hard including tech stocks such as APT. However the biggest weightings of the Index which are the big4 banks have not rallied back up.

Rather than the financial media theories in the news sites, I wanted to see the facts in front of me.

Do you have any more stats,charts or info on this?