Signs of a bottom – what to look for and consider.

by ControlPlusZ

Looking for a bottom? Try grinder. Looking for THE bottom?

No one knows for sure. But consider the following data:

  1. Past outbreaks over 20 years have seen SP 500 down from 6-13% (we are in the middle of that range)
  2. We see recovery fairly quickly historically- in months (exact data linked below)
  3. With points one and two in mind I would expect a little more pain though is possible because a) we have a hit to a manufacturing sector b) retail leverage and stock marker prices are at an all time high
  4. Media outlets only care about the “dramatic” – the will say “worst drop ever” “1,000 points” etc. They will start to reference “points” vs percentage in headlines for the dramatic effect (a 1,000 point now is not as significant as a 1,000 drop a decade ago)
  5. Expect wild swings due to retail investors who never saw a drop and leverage being used – especially in the afternoons as people get margin called.
  6. Dramatic increases in volume will also be a sign of a bottom (The Bottom) as people finally “give up” and go back to their fast food job
  7. The hit to China is UNDER estimated while the hit to the USA is OVER estimated. We are not China. I spent a lot of time there… Friends and Family from China travel to the US for products and health care. China has almost no healthcare and shit sanitation. If they are not all dead the virus cannot be that bad. The USA is one of the cleanest countries with the best hygiene. We consume most the worlds deodorant. Any thought of a germ freaks us out. We will be fine.
  8. WSB will mostly get it wrong (sorry) – especially with all the new guys in due to FOMO.

www.cnbc.com/2020/02/24/past-disease-outbreaks-show-investors-shoud-ignore-the-noise-of-coronavirus.html

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.