Welcome to my Analysis of the S&P 500.
First of all, I want to clear some misunderstandings of why it didn't crash at the beginning and why this crash is linked to the coronavirus.
The coronavirus started spreading in China, the biggest source of our supply. Since the spreading was so rapidly, they needed to quarantine and stop production which cuts our supply chain.
After that, big companies cant produce and make sales which is bad for the holders of the company.
The news hit worldwide at the end of January and as you can see, the markets started to crash just because of that (1). So why did it pumped back to new highs?
Well, that's because the Fed prints and pumps fiat into the markets to avoid a crisis. The economy is one of the biggest if not the biggest part of the stabilization of the country.
That's why the state needs to counter a crash at all costs. But printing and pumping only works short term and that's why it is crashing massively currently.
At (1) you can see that many entities exit positions in fear of the coronavirus. At (2) you can see the fed pumping printed money in the market to prevent a major crash that takes everything with it but only works short term.
After that, the fed loses against the shorts and a massive crash occurs.
Why will it go much further down?
The biggest problem in this crisis now is that the USA is not testing people for corona. A majority of the people won't test by its own initiative since it costs a fortune to do that.
That's why the statistics of the infected people in the USA are not truthful. Because of bad transparency, people keep spreading the disease even more.
At one point, many Americans realize that there are far more cases in the USA then stated. Many quarantines will be set up and people won't be able to work.
This conducts an even further crash. Also, China started its production again because of the fear of an even worse economic collapse. This, on the one hand, is something positive for the market short term, but on the other hand, spreading the disease even more which of course is negative as well.
First of all, I want to clear some misunderstandings of why it didn't crash at the beginning and why this crash is linked to the coronavirus.
The coronavirus started spreading in China, the biggest source of our supply. Since the spreading was so rapidly, they needed to quarantine and stop production which cuts our supply chain.
After that, big companies cant produce and make sales which is bad for the holders of the company.
The news hit worldwide at the end of January and as you can see, the markets started to crash just because of that (1). So why did it pumped back to new highs?
Well, that's because the Fed prints and pumps fiat into the markets to avoid a crisis. The economy is one of the biggest if not the biggest part of the stabilization of the country.
That's why the state needs to counter a crash at all costs. But printing and pumping only works short term and that's why it is crashing massively currently.
At (1) you can see that many entities exit positions in fear of the coronavirus. At (2) you can see the fed pumping printed money in the market to prevent a major crash that takes everything with it but only works short term.
After that, the fed loses against the shorts and a massive crash occurs.
Why will it go much further down?
The biggest problem in this crisis now is that the USA is not testing people for corona. A majority of the people won't test by its own initiative since it costs a fortune to do that.
That's why the statistics of the infected people in the USA are not truthful. Because of bad transparency, people keep spreading the disease even more.
At one point, many Americans realize that there are far more cases in the USA then stated. Many quarantines will be set up and people won't be able to work.
This conducts an even further crash. Also, China started its production again because of the fear of an even worse economic collapse. This, on the one hand, is something positive for the market short term, but on the other hand, spreading the disease even more which of course is negative as well.