The coronavirus is really spreading throughout the world now, having made its way to both Europe and the United States. That’s had a tremendous effect on stock markets around the world, and on Thursday we saw a big drop…and Friday’s open has been nightmarish, also.
So naturally I have people asking me whether I think this is the beginning of the big crash.
And here’s my answer. It could be, but I still don’t think we are quite there.
Expect a strong V-shaped rally to follow
What we’re dealing with right now — and it is unique — is the actual definition of a black swan: a quick moving phenomenon (in this case, COVID-19) that has a pronounced and unpredictable effect on the markets. And this virus has some tricks to it, so expect a little more turbulence as governments try to tamp it down.
But still, I expect things to turn around today or in the next few days, and for a strong V-shaped rally to follow, and a bounce through April or May…right before the actual crash.
I will simultaneously be tracking this crash versus the first big crash in tech stocks from March to May 2000 to see if it is looking more like the first big 42% or so crash in 2.6 or so months — like I did in the two last sharp crashes in early and late 2018.
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