Nothing Normal
- Apr 1, 2020
- 2 min read
Updated: Aug 21, 2020
My daily reading is filled with warnings that the worst is still coming. First, on the health side of things, we have not reached a peak in the so-called bell curve of Covid-19. On the financial side, I tend to agree with the warnings that the markets are in a “bear rally.” These are a few of the headlines on Yahoo Finance 3/30/2020.
Why the Dow's best week in 82 years is no reason to get bullish
These indicators suggest a stock-market bottom, but coronavirus fears could send the S&P 500 swooning again
Investors shouldn't let a stock market sucker's rally fool them
I would agree that it would be perfectly normal* for the markets go back and “test” the most recent lows. Chart readers would say that if the markets go back to that level and recover again, that the markets will have “passed” the test. On the other hand, if the markets go back to that level and go lower, that the markets will have “failed” the test. In either case, most chart readers that I follow are not expecting this rally to last.
*There’s nothing normal about life right now. No surprise then, that there’s nothing normal about the markets. My favorite article from the last few days is this one.
The futility of forming any forecast
I love the comment from Howard Marks. “There’s just no justification for having a confident view at the present time, in my opinion.”
The phrase un-charted waters, means charts don't help. I can talk about oversold levels or support levels, etc, and as much as I enjoy studying the markets, I don’t think technical measurements are very important right now. So when I alert you to the possibility that the markets may have some rough spots ahead, I’m not trying to forecast anything. I’m simply trying to prepare you to weather the next storm just like you did the previous one.
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