This week we have entered a down period in the market, a period that should have already commenced, as the Coronavirus has not just happened.
The trigger is more a realization in the US market that it is no longer conducive to keep propping up share prices to favour one political party (Trump). Thus leaving stock prices to more freely find their level.
Where the Chinese are supporting their economy with a stimulus package, the Americans have decided to stand aside. Some may believe this is a retaliation over the trade war. Others may believe that the USA doesn’t have the capital.
The efforts of China to contain the spread of the virus (using their own style of containment) will assist slowing its spread. The Chinese see the importance of the greater good. We are seeing the beginning of containment in China but the move to the rest of the world is now beginning.
This down period will not last for too long and we believe the market will recover to where it was before this fall.
Remember the stock market is the breeding place of optimism. Where investors see the green shoots of containment or recovery, they will buy any positive.
We do not forsee further massive drops, more sideways movement with some up and down gyrations for the coming 2 months.
In the down time, Pythagoras will give buying signals which we believe will be very profitable when the market takes off again.
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