The Dow Jones Industrial Average saw the best percent gain today since 1933 and its largest 1-day point gain ever, up $2,113 today with a close of $20,704 from an opening price of $19,722. This move comes after price held support yesterday at the 50% Fibonacci retracement level of the total Fibonacci range from the 2009 low and the recent all-time high, which was pointed out in the previous chart shared.
With today’s record bounce, price has risen back inside of the broadening wedge pattern, but hit resistance right at the 38.2% Fibonacci retracement level. In order to regain a positive trend on the weekly timeframe, price needs to rise above the 38.2% Fib so we need to see continuation tomorrow with a further rise in price before becoming too optimistic about today’s rally.
Today’s bounce can be attributed to technical support levels holding which are the 50% Fib as well as the 2015 price level(red) which was a previous resistance level. In technical analysis, previous resistance tends to become support when/if it is tested again. These two levels were likely being watched by many technical traders as areas to begin buying in anticipation of a bounce.
Today’s move was also news-based as news that a coronavirus economic relief package is close to being passed, as well as President Trumps remarks in regard to him anticipating a reopening of the U.S. economy by Easter, or one month from now. Considering that Republicans and Democrats continue to debate measures within the bill and have so far failed to come to an agreement, hopes that a deal will be reached and the bill will be passed this week are still speculation. As for Trump’s remarks that the economy will reopen next month, that also seems unlikely seeing as how U.S. case counts are still rising and more U.S. states are entering complete lockdowns. New York is the hotspot of outbreaks in the U.S. and a sign of what’s to come for other states, and New York’s governor today stated that they will not reach a peak in cases for another 2-3 weeks meaning we are still over a month away from seeing a total peak in the U.S. President Trump still appears to be more concerned about the stock market and economy than the health of the public since he has an election coming up in November and has touted the stock market as his main measure of success as president.
While today’s bounce in the stock market was a much needed relief rally after the worst decline for stocks in U.S. history, bear market rallies are more extreme than those seen in actual bull markets, meaning that this jump today was more than likely a counter-trend rally in what is still an overall bear market.
If a relief package isn’t passed by Thursday, I’m anticipating a return to selling based on the fact that job numbers are due to be released on Thursday and they are forecast to show the worst monthly unemployment numbers in U.S. history with an estimated 2,000,000 people filing for unemployment due to business closures resulting from the coronavirus and states going into lockdown. This is certainly to have a negative impact on investors’ view of the health of the economy right now as well as place doubt on President Trump’s expectation that we will return to business as usual next month. Trump likely knows just how bad the job numbers are supposed to be seeing as how his administration has asked states not to report unemployment numbers head of the official Thursday report.
At this point, even if the coronavirus economic relief package is passed by Thursday it is likely going to be overshadowed by the grim outlook on economic activity based on unemployment numbers as well as the fact that more states are going into lockdown, which will only increase the numbers of those filing for unemployment. The overall impact of the coronavirus on the U.S. economy is still a guessing game, and right now all hope is being placed on a relief package, of which the amount may be too small to have a significant impact by the time all is said and done. We also still need to see the impact to company revenue and earnings before we will have a better picture as to how hard they have been impacted by the coronavirus.
The overall trend in the stock market remains bearish, but that doesn’t mean we won’t see bounces here and there as traders attempt to pick the bottom. Going forward we need to see price hold above the low made yesterday on any pullback in order for a positive trend to form. A breakdown below yesterdays low would be an indication that more losses are likely and that today’s bounce was just a reactionary bounce due to significant technical levels being reached and hopes that an economic relief package will be passed. My personal opinion is that we need to see a peak in coronavirus cases and a clearer picture as to the extent of the damage done to companies before a bottom can be made. My guess is that it will be another 2-3 months at the earliest before an actual bottom is made.
With today’s record bounce, price has risen back inside of the broadening wedge pattern, but hit resistance right at the 38.2% Fibonacci retracement level. In order to regain a positive trend on the weekly timeframe, price needs to rise above the 38.2% Fib so we need to see continuation tomorrow with a further rise in price before becoming too optimistic about today’s rally.
Today’s bounce can be attributed to technical support levels holding which are the 50% Fib as well as the 2015 price level(red) which was a previous resistance level. In technical analysis, previous resistance tends to become support when/if it is tested again. These two levels were likely being watched by many technical traders as areas to begin buying in anticipation of a bounce.
Today’s move was also news-based as news that a coronavirus economic relief package is close to being passed, as well as President Trumps remarks in regard to him anticipating a reopening of the U.S. economy by Easter, or one month from now. Considering that Republicans and Democrats continue to debate measures within the bill and have so far failed to come to an agreement, hopes that a deal will be reached and the bill will be passed this week are still speculation. As for Trump’s remarks that the economy will reopen next month, that also seems unlikely seeing as how U.S. case counts are still rising and more U.S. states are entering complete lockdowns. New York is the hotspot of outbreaks in the U.S. and a sign of what’s to come for other states, and New York’s governor today stated that they will not reach a peak in cases for another 2-3 weeks meaning we are still over a month away from seeing a total peak in the U.S. President Trump still appears to be more concerned about the stock market and economy than the health of the public since he has an election coming up in November and has touted the stock market as his main measure of success as president.
While today’s bounce in the stock market was a much needed relief rally after the worst decline for stocks in U.S. history, bear market rallies are more extreme than those seen in actual bull markets, meaning that this jump today was more than likely a counter-trend rally in what is still an overall bear market.
If a relief package isn’t passed by Thursday, I’m anticipating a return to selling based on the fact that job numbers are due to be released on Thursday and they are forecast to show the worst monthly unemployment numbers in U.S. history with an estimated 2,000,000 people filing for unemployment due to business closures resulting from the coronavirus and states going into lockdown. This is certainly to have a negative impact on investors’ view of the health of the economy right now as well as place doubt on President Trump’s expectation that we will return to business as usual next month. Trump likely knows just how bad the job numbers are supposed to be seeing as how his administration has asked states not to report unemployment numbers head of the official Thursday report.
At this point, even if the coronavirus economic relief package is passed by Thursday it is likely going to be overshadowed by the grim outlook on economic activity based on unemployment numbers as well as the fact that more states are going into lockdown, which will only increase the numbers of those filing for unemployment. The overall impact of the coronavirus on the U.S. economy is still a guessing game, and right now all hope is being placed on a relief package, of which the amount may be too small to have a significant impact by the time all is said and done. We also still need to see the impact to company revenue and earnings before we will have a better picture as to how hard they have been impacted by the coronavirus.
The overall trend in the stock market remains bearish, but that doesn’t mean we won’t see bounces here and there as traders attempt to pick the bottom. Going forward we need to see price hold above the low made yesterday on any pullback in order for a positive trend to form. A breakdown below yesterdays low would be an indication that more losses are likely and that today’s bounce was just a reactionary bounce due to significant technical levels being reached and hopes that an economic relief package will be passed. My personal opinion is that we need to see a peak in coronavirus cases and a clearer picture as to the extent of the damage done to companies before a bottom can be made. My guess is that it will be another 2-3 months at the earliest before an actual bottom is made.