Thursday, March 26, 2020

Elliott Wave Stock Market Update - March 25

The market fell to a lower low on Monday at 2191 and has rallied substantially since then. This doesn't mean that we are seeing "the bottom" but rather a relief rally from an extreme oversold condition and the ending of a bearish 5 wave count. Hard to see how far the counter-rally could go but the next level of resistance is at 2855 so there is plenty of room to go. Ideally, we would see an ABC test 2855 or the 50 DMA in the next week or so and then see another strong sell-off towards sub-2000 levels. Given how the numbers from how the number from coronavirus is rising, we might see the next intense sell-off wave when cases are in the hundreds of thousands or even over a million. I said last week that we were going to surpass China in coronavirus cases this week and unfortunately it might happen by the end of the week. But that's not even what would cause a complete market collapse, it is the ongoing realization that our government is not capable of handling this crisis. We now have Trump declaring that he wants the country to go back to normal by April and that the media is making this a big deal to "hurt his re-election chances". All these contradicting messages and the absence of a coherent strategy will ensure we will have the most cases in the world by far and an economy that could go into not just a recession but a depression. The strategy of doing business as normal and ignore the hundreds of thousands if not millions of people dying can only work in Trump's brain.

Stay healthy and safe!

Short Term Trend = Bearish
Medium Term Trend = Bearish
Long Term Trend = Bearish

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking

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