Since the recent sell off in US stocks, many members on Trading View have speculated the virus news could trigger a much larger decline.
This is similar to early 2018 when news of the trade war was expected to cause the US economy to go into a recession and stocks into a bear market.
That forecast didn't workout.
The news to focus on comes from the markets themselves, in the form of evidence from the four market dimensions; price, time, sentiment and, momentum.
A sub section of the momentum dimension comes from examining the relationships between the major national stock indices. The Shanghai Composite (SHCOMP) needs to be followed because for several years its been the weakest of the major national stock indices. If this weak index shows strength relative to the stronger national indices such as the SPX it could be a very bullish hint.
A few days ago a friend of mine asked a very interesting question. What would happen to the SPX if people in the US started dying from the virus? So far no one in the US has died.
We do know that people in China have died, whats happening with SHCOMP? Its going up! If the virus is going to cause a worldwide economic collapse then SHCOMP should be plunging, its not! This is the strongest piece of market evidence that the virus probably won't cause a stock bear market.
The real market news comes from the markets, that's the news to follow.
Months from now we could be looking back at this virus selloff as a great opportunity to go long stocks.
Mark
This is similar to early 2018 when news of the trade war was expected to cause the US economy to go into a recession and stocks into a bear market.
That forecast didn't workout.
The news to focus on comes from the markets themselves, in the form of evidence from the four market dimensions; price, time, sentiment and, momentum.
A sub section of the momentum dimension comes from examining the relationships between the major national stock indices. The Shanghai Composite (SHCOMP) needs to be followed because for several years its been the weakest of the major national stock indices. If this weak index shows strength relative to the stronger national indices such as the SPX it could be a very bullish hint.
A few days ago a friend of mine asked a very interesting question. What would happen to the SPX if people in the US started dying from the virus? So far no one in the US has died.
We do know that people in China have died, whats happening with SHCOMP? Its going up! If the virus is going to cause a worldwide economic collapse then SHCOMP should be plunging, its not! This is the strongest piece of market evidence that the virus probably won't cause a stock bear market.
The real market news comes from the markets, that's the news to follow.
Months from now we could be looking back at this virus selloff as a great opportunity to go long stocks.
Mark