Or is this a buying opportunity? Over the past 5+ days, a very clear change in market direction has taken place in the US and global markets. Prior to this, the US markets were reacting to Q4 earnings data and minimizing the potential global pandemic of the Coronavirus. The continued “rally to the peak” process was taking place and was very impressive from a purely euphoric trader standpoint. Our researchers found it amazing that the markets and the Dow Jones Industrial Index continued to rally many weeks after the news of economic contraction and quarantines setup in China/Asia.
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We believe a number of critical factors may have pushed global investors away from their comfortable, happy, bullish attitude over the past 5+ days – most importantly the reality that the virus pandemic was very real and would continue to result in a more severe global economic contraction process and the outcome of the Caucus voting where Bernie Sanders appears to be leading almost every early voting event. There are now two major concerns hanging over the global markets and the future of the US 2020 Presidential elections. These two major issues may be enough to change investor sentiment and present a very real volatility event.
Uncertainty breeds fear and can cause traders to move away from risk. We discussed these topics in research posts many months ago. Continue reading "Has The Equities Waterfall Event Started?"