2020.04.11 00:46
Opinion: Stocks will revisit their coronavirus crash low, and here’s when to expect it
By Mark HulbertU.S. market history points to a final bottom in August
Is the great coronavirus bear market of 2020 now history? Many exuberant bulls would have you believe that it is, since the S&P 500 SPX, +1.44% is now more than 20% higher than its mid-March low. That satisfies the semi-official definition of a bull market. So in that narrow sense, the bulls are right. But in a broader sense, I consider their arguments to be a triumph of hope over experience. If by definition we’re in a new bull market, the question we should be asking is different: Will the stock market hit a new low later this year, lower than where it stood at the March low? I’m convinced the answer is “yes.” My study of past bear markets revealed a number of themes, each of which points to the March low being broken in coming weeks or months. While the market’s rally since its March 23 low has been explosive, it’s not unprecedented. Since the Dow Jones Industrial Average DJIA, +1.22% was created in the late 1800s, there have been 38 other occasions where it rallied just as much (or more) in just as short a period — and all of them occurred during the Great Depression. Such ominous parallels are a powerful reminder that the market can explode upward during the context of a devastating long-term decline. Consider the bull- and bear-market calendar maintained by Ned Davis Research. According to it, there were no fewer than six bull markets between the 1929 stock market crash and the end of the 1930s. I doubt an investor interviewed in 1939 about his experience of the Great Depression would have highlighted those bull markets. Another way of making the same point is to measure the number of days between the end of the bear market’s first leg down and its eventual end. There are 11 bear markets in the Ned Davis calendar in which the Dow fell by more than the 37.1% loss it incurred between its February 2020 high to its March low. On average across those 11, as you can see from the chart below, the final bear market low came 137 days after first registering such a loss. If we add that average to the day of the March low, we come up with a projected low on Aug. 7.
Sentiment also points to a lower low for the U.S. market. That’s because the usual pattern is for the final bear-market bottom to be accompanied by thoroughgoing pessimism and despair. That’s not what we’ve seen over the last couple of weeks. In fact, just the opposite is evident — eagerness to declare that the worst is now behind us. Another way of putting this: When the bear market does finally hit its low, you are unlikely to even be asking whether the bear has breathed his last. You’re more likely at that point to have given up on equities altogether, throwing in the towel and cautioning anyone who would listen that any rally attempt is nothing but a bear-market trap to lure gullible bulls. I compared sentiment during the recent bear market to that of other bear markets of the past 40 years in a Wall Street Journal column earlier this week. For the most part, the market timers I monitor were more scared at the lows of those prior bear markets than they have been recently. That’s very revealing. A similar conclusion is reached when we focus on the CBOE’s Volatility Index, or VIX VIX, -3.87% . An analysis of all bear markets since 1990 shows that the VIX almost always hits its high well before the bear market registers its final low. The only two exceptions came after the 9-11 terrorist attacks and at the end of the two-month bear market in 1998 that accompanied the bankruptcy of Long Term Capital Management. In those two cases, the VIX’s high came on the same day of the bear market’s low. Other than those two exceptions, the average lead time of the VIX’s peak to the bear market low was 90 days. Add that to the day on which the VIX hit its peak (Mar. 16) and you get a projected low on Jun. 14. One way of summing up these historical precedents: We should expect a retest of the market’s March low. In fact, according to an analysis conducted by Ned Davis Research, 70% of the time over the past century the Dow has broken below the lows hit at the bottom of any waterfall decline. Plus: Reality check for market bulls: It’s going to be a long slog for stocks
Upon studying past declines that also satisfied these criteria, the analysts wrote: “The temptation [at the end of a waterfall decline] is to breathe a sigh of relief that the waterfall is over and jump back into the market. History suggests that a more likely scenario is a basing and testing period that includes a breaching of the waterfall lows.” Read Next
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2020.04.11 01:20
2020.04.11 01:49
I think the market is entirely up to the virus. The market will go up sharply when it becomes
obvious when the normalcy will return because the pandemic ends. Something like the vaccination
will be available in March, next year hits the news or the warm weather dissipates the virus. But
if the uncertainty continues, the market will fluctuate with
extreme volatility. All I can say, "your fortune depends on timing". For timing, luck 7 skill 3(운칠기삼).
2020.04.11 02:56
Yesterday, we had an online lecture giving a full review of this Wuhan virus by one of the faculty
members/virology specialists and became worrying more about the risk of reinfection on the same
the person who survived through the first infection. The virus is a virus after all and it reminds me of
Hepatitis B, I narrowly escaped after such fulminant infection- my fellow stuck my finger during
the emergency operation for the ruptured aortic aneurysm on the guy who has been known for hepatitis!-
and fully recovered while many succumbed to become the chronic form to shed the virus through the rest of life.
So if the human body can't generate full immunity for this Wuhan virus to remain permanently like Hepatitis A,
then? I became shakier to learn even the experts don't seem to know how much they do not know
and further they don't know how much they should know to make a proper long-range plan. Depressing!!!!
BB Lee
2020.04.11 05:34
It appears that the market, more or less, ignores Coronavirus at this time.
The market seems to have developed an immunity and considers that Coronavirus will be controlled soon.
The major huddle left in front of us is the ballooning corporate debts that may become uncontrollable.
They say that the coronavirus event may be the needle to puncture the balloon.
Then, we will get into a hell of hell. I just hope that the balloon ruptures before the November election,
so that we can safely send Trump to jail.
The U.S. can not survive another 4 years under the orange-headed lizard.
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Usually, I do not quote any stock market opinions or predictions but we are at the critical juncture
as of this week or month. I thought this article would be helpful in guiding our near term strategy.
While most of the wall street experts work for their own profit, Mark Hulbert does not sell his opinion
or get a profit out of his recommendation.
Those who follow the market will understand what this article says. To the rest, this has no meaning.
It's time to be careful. Watch both sides of the street. Believe it or not, it is entirely up to you. Good luck!