Potential Bounce But Then Down to SPY 200

Quick Review

The last two weeks each Sunday we called for new stock market lows (here and here). Three weeks ago we called for a bounce and got one. On February 23rd we called a key level that ended up being the initial break of this bear market drop.

Stock Market: What Now?

I think that this straight line down can continue until 200 SPY. It can get there or near-by at week's end at this pace. If that's correct it means short rallies to 235-240.

Jobless claims jumped on Thursday. This week they should jump again. That tells you we are currently in the recession.

Why is the market down 30%? Because jobless claims just jumped 40%. The market predicted that. Next week jobless claims are supposed to jump again giving you some perspective on how there's still stock market downside.

The number of new Covid-19 cases day-to-day are not slowing. If anything I think the number can accelerate as test kits start getting distributed and the true numbers start turning up.

Governments are in the process of starting to shut down more and more. Some did already but most of the world is still reacting including the US.

Even Italy that shutdown is still seeing a surge in numbers.

That tells me there's still a fundamental risk. Remember, this global stat of new cases day-to-day is the most important number in the world for everybody personally and business-wise. It's amazing how the entire world is all inter-connectedly dependent on this one outcome.

I think though that after this virus is contained there is a going to a be a huge V-shaped recovery sending the market flying based on all this government and Fed intervention. President Trump is doing everything he can right now to drive stimulus. That will likely end up benefiting him right when elections occur.

I hope, pray and believe that the virus will peak and start to be maintained at some point in the next month or two.