Governments are shutting down the economy to save our healthcare system and as long as the uncertainties exist with the length of this shutdown it is impossible to measure the collapse of the broader market and where the bottom might be. At this rate the cure will be worse than the virus.
Long term support levels in the broader market are failing. The ascending support for the Dow and S&P 500 were broken last week and Nasdaq is the only broad index that is still holding above this important support level.
SPDR Dow Jones Industrial Average ETF (DIA)
I don’t know how low we will go. The next support level on the Dow is 18,000 and below that is 15,000. Sunday evening trading saw Dow futures halted as they were limit down in the first four minutes.
The situation is so fluid that any kind of fundamental or technical analysis is mostly useless until the panic subsides. The markets are so full of fear and anxiety prices could be driven down much further than they should.
The economic impact will be a function of how long this shutdown lasts and no one knows the answer to that question yet. As more data becomes available I believe the timeline to recovery will start to become more clear and this should provide a floor for the stock market. In addition, as more price data becomes available it will be easier for the government to moderate the shutdown and get our economy back on.
Until this happens it will be difficult to analyze my charts except on a very macro level. The daily moves are so large that the important price levels are now very long term. The longer this takes the deeper we are going.
Stop the Shutdown,
Don