I have 3 possible outcomes that I am speculating. The first out come is the V bottom which is labeled with the dotted line. I give this outcome only a 5% chance because of the current market environment. We are currently at around 0% interest rates so the Fed can't give any more relief dropping rate any lower. The Fed has also has printed 6 million in stimulus to help the market which inflates the dollars buying power and really is only a temporary fix short term that is going to hurt the Economic market in the long run.The Fed can't continue inflating this artificial market with things they have in the past QE and stimulus it's becoming a very synthetic bubble. It's also projected that 60 million Americans are going to be out of work which adds up to 30% which is more than the great depression which had 25%. The only reason i give the V bottom a 5% chance is because I could see the Fed doing something extreme that has never been done before like printing money to buy stocks. This would maybe create a false support in the stock market. But you just can't keep printing money to put band aids on historical monetary problems that have progressed to the situation of where we are it's gotta give eventually.
The second outcome is the double dip. I give the double dip a 35% chance because as stated above the Fed might take extreme measures to give false synthetic support to the market that has never been done before. Also Chart Structural wise it could make sense to have less of an extreme fall on the next sell off and we could find support at the bottom of the channel. Another reason I weighted this possibility to 1/3 is if in the case we get back to work sooner than we think and enough small businesses don't go under and the unemployment rate of 60 million quickly becomes less and with the fed synthetic stimulus and life getting back to normal buyers might come in around the time we reach the bottom of the channel support.
The third outcome is a market depression. I give this a 60% chance because everything that has been building up from the past will come to light. Poor monetary policy and fake synthetic market corrections with the fed always relying on dropping interest rates printing money and QE has been a ticking time bomb to pop eventually and this is the perfect storm to make it happen. 60 million Americans are expected to be out of work which like I said before is 30% to the great depression's 25%. Banks will have to be bailed out for 2nd time in 12 years small business will go under and there is pretty much nothing the fed can do because interest rates are already at 0% as they were just before the great depression. In 2008 we were at least able to drop rates from 5% to 0% interest rates have stayed low through this entire synthetic QE market bull run. Unless some weird new crooked policy from the FED comes out I really don't see this going any other way. If our economic markets never had new synthetic policy's this would be weighted a lot higher. Also the virus can be easy scapegoat to finally let the market crash and reset and not continue the madness of synthetic market stimulus. Good luck out there hope everyone is doing alright through the madness that is going on.
I agree with much of your commentary, acknowledging that the currents run is largely being driven by the fed what do see as a potential turning point when market fundamentals regain control. I am bearish longterm but I tend to believe the earnings season is already priced in and along with potential good news around the virus i could see this up swing lasting till 2900-3000. I expect some kind of clear reversal around that time but I believe there needs to be some kind of clear unexpected event thats not priced in. I.e. major company goes under, oil drops down to the 10$, a second world wide virus wave, housing crash etc. What would you consider a trigger point for such a downturn?
I find it fun to contemplate the obscene and hazardous ideas that fall under your "extreme measures" category of yours. Any other ideas you've had besides printing money and buying stocks? God that is so crooked.
FIrst time poster. I have read a lot on this site, and find it very informative. Back to this particular post, I agree. However, the herd mentality of "don't fight the fed" seems to be in play for longer than I thought (yes, its only been a few weeks, but still). Even Goldman came out yesterday stating we have bottomed. It's hard to understand this market, when the free market is not allowed to take hold...