Friday, March 27, 2020

The Corona Virus and all that

As you know from the daily guesstimates I think there is a good chance that the U.S. stock market established a long term low earlier this week. In the unlikely event that this low is broken in the weeks ahead it won't be broken by much.

I hope to post a more thorough stock market assessment and prediction soon. But for now I want to explain why I think the present pessimism about the effects of the Corona virus is way overdone.

The fundamental fact is that warmer spring and summer weather across the country will start limiting the spread of the virus. I think in a couple of weeks most of the country will be returning to work and social life will resume.

Looking ahead there will certainly be a new outbreak of Corona this fall. But by then the country and the world will be well prepared for its resurgence. During the next few months production of test kits, masks, ventilators and the other medical equipment needed to contain the virus will be ramping up quickly. Stockpiles of these items will be readily available when they are needed.

These preparations will contain the Corona virus effectively when it breaks out again this fall. Businesses and schools will remain open. Commercial and social life will continue normally, just as it does during a bad flu season.

I think the stock market sees this as it peers ahead through the mist which always obscures the future. Moreover, as I have mentioned several times in recent guesstimates, the world's central banks are aggressively pursuing policies which provide plenty of liquidity to meet the demands of the flight to safe assets triggered by the virus outbreak. This liquidity will find its way into longer term financial and then into real assets. Consequently a long bull market lies directly ahead.

Guesstimates on March 27, 2020


June S&P E-mini Futures:  Yesterday’s rally carried the ES well above 2490 resistance. This means that the 2174 low almost surely ended the drop from 3397 and that a new bull market has begun. Even if 2174 low is taken out the downside is limited to 2000-2090. I think the Fed’s new QE program is very bullish long term. Bearish sentiment and volatility remain very high and this reinforces my view that a very important low has occurred.
QQQ: Support is 165.
TNX (ten year note yield): Downside target is 0.00.
Euro-US Dollar: Resistance above the market is 115.50. The longer term picture is bearish.
Dollar-Yen: The dollar-yen downside target was nearly reached but now the market has popped back above 108 on a flight to the dollar. I am not sure what is going on with the dollar-yen other than it seems to be confined within a 101-115 trading range.
West Texas Crude Oil: Support now is 18 with resistance at 30.
Gold: It looks like an extended drop has begun, one likely to take gold back to vicinity to 1000.
Silver: Silver has reached the 12.50 downside target but will probably continue lower to 9.50.
Google: Support is 1000.
Apple: Support is 225.
Amazon: 1650 is support.
Facebook:  Support is 125.
Twitter: Support at the 28 level has failed. Downside target now 13.
Alibaba: Support is 150.
Visa: Support is 125.

Thursday, March 26, 2020

Guesstimates on March 26, 2020


June S&P E-mini Futures:  The 2490 resistance failed for a couple of hours yesterday but the ES closed well below that level. There is support at 2350 and a drop into the 2000-2100 support zone is still an even bet. But it is equally likely that 2174 ended the drop from 3397. I think the Fed’s new QE program is very bullish long term. Bearish sentiment and volatility remain very high and this means a very important low is imminent or has already occurred.
QQQ: Support is 165.
TNX (ten year note yield): Downside target is 0.00.
Euro-US Dollar: Resistance above the market is 115.50. The longer term picture is bearish.
Dollar-Yen: The dollar-yen downside target was nearly reached but now the market has popped back above 108 on a flight to the dollar. I am not sure what is going on with the dollar-yen other than it seems to be confined within a 101-115 trading range.
West Texas Crude Oil: Support now is 18 with resistance at 30.
Gold: It looks like an extended drop has begun, one likely to take gold back to vicinity to 1000.
Silver: Silver has reached the 12.50 downside target but will probably continue lower to 9.50.
Google: Support is 1000.
Apple: Support is 225.
Amazon: 1650 is support.
Facebook:  Support is 125.
Twitter: Support at the 28 level has failed. Downside target now 13.
Alibaba: Support is 150.
Visa: Support is 125.

Wednesday, March 25, 2020

Guesstimates on March 25, 2020


June S&P E-mini Futures:  The 2490 resistance level held overnight. There is still a chance of a drop into the 2000-2100 support zone. But it is equally likely that 2174 ended the drop from 3397. I think the Fed’s new QE program is very bullish long term. Bearish sentiment and volatility remain very high and this means a very important low is imminent or has already occurred.
QQQ: Support is 165.
TNX (ten year note yield): Downside target is 0.00.
Euro-US Dollar: Resistance above the market is 115.50. The longer term picture is bearish.
Dollar-Yen: The dollar-yen downside target was nearly reached but now the market has popped back above 108 on a flight to the dollar. I am not sure what is going on with the dollar-yen other than it seems to be confined within a 101-115 trading range.
West Texas Crude Oil: Support now is 18 with resistance at 30.
Gold: It looks like an extended drop has begun, one likely to take gold back to vicinity to 1000.
Silver: Silver has reached the 12.50 downside target but will probably continue lower to 9.50.
Google: Support is 1000.
Apple: Support is 225.
Amazon: 1650 is support.
Facebook:  Support is 125.
Twitter: Support at the 28 level has failed. Downside target now 13.
Alibaba: Support is 150.
Visa: Support is 125.