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Stock market Predictions with Corona

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JohnBuffet

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Hey guys,

What are you predictions for the stock market with the current Corona situation going on? I know it's been hit hard for the past few days. You guys think this will continue for weeks? Crash? Go up?

When is it time to buy in?
 

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JScott

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Hey guys,

What are you predictions for the stock market with the current Corona situation going on? I know it's been hit hard for the past few days. You guys think this will continue for weeks? Crash? Go up?

When is it time to buy in?
I wouldn't call this a prediction, as I have absolutely no idea... Let's call it a wild guess...

My guess is that it will stabilize by early next week, and will probably start going back up. And then, in a few weeks, when companies start warning that they're going to miss Q2 targets, it will take a big hit again.

I also think it's reasonable to assume that the situation will spill over into the jobs market, and will have an impact on unemployment numbers, which will also cause a ripple through the equities markets, and potentially the entire economy.

The bigger question is the longer-term consequences, and that will depend on a couple things, including whether the virus becomes a bigger issue and how aggressive the Fed is willing to be to stem a downturn.
 

LightningHelix

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Hey guys,

What are you predictions for the stock market with the current Corona situation going on? I know it's been hit hard for the past few days. You guys think this will continue for weeks? Crash? Go up?

When is it time to buy in?
Nobody has a crystal ball.

I'd recommend against the big gamble of the stock market. Bonds can be great passive revenue, but only after you have a very large amount of money to invest. Most people around here are more likely to invest in themselves than go gambling.

I've met too many people who think they are investing aces, just to come out of a zero sum game.

EDIT: Investing in Assets is infinitely better.
 

Madame Peccato

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It is definitely not helping the owners of Corona beer...
Great case study for SEO guys. Typing corona into Google shows zero signs of the beer for me. The best shot is a newspaper article at the bottom of the first page that talks about the business' losses.

Show'em how much you lose by not being first on Google. Lol.
 

MJ DeMarco

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The stock market thrives on a certain level of certainty.

There is no certainty with this, especially something we can't see.

Unlike a hurricane (which people can see/sense), this is more obscure.

But once the conference cancellations start to be publicized, supply chain disruptions, earnings guided lower, and commerce starts to grind down, I expect markets to continue to react negatively.

Additionally, I also believe that this also adds a certain level of uncertainty over the November election. The nice early 2020 run up, IMO, was the market pricing in a Trump re-election, hence, it was forecasting more certainty. That reelection "certainty" also is likely gone, depending how this pans out in the next few months ... partisans are hoping this is Trump's "Katrina", lives be damned. Any administrative mishandling (which is always likely in a situation that might happen only once every fifty years) will be spotlighted, headlined, and beaten to a pulp.

TLDR; I think it will take a few weeks, perhaps months, until the smoke clears and a modicum level of "certainty" is regained. My guess is the bottom will be SPX 2500, which is about a 20-25% correction.
 

MJ DeMarco

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TLDR; I think it will take a few weeks, perhaps months, until the smoke clears and a modicum level of "certainty" is regained. My guess is the bottom will be SPX 2500, which is about a 20-25% correction.
Futures down big again this morning, we might have an SPX open in the 2800s.
 

MoreValue

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Where is the bottom is the question? I bought LEAPs , but the underlying still keeps dropping. Probably a mistake....
 

BizyDad

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Great case study for SEO guys. Typing corona into Google shows zero signs of the beer for me. The best shot is a newspaper article at the bottom of the first page that talks about the business' losses.

Show'em how much you lose by not being first on Google. Lol.
Thank you for pointing that out. I took a screenshot to share with clients so we can discuss how Google reacts pretty quickly to changes in the meaning of words.

I do see the first organic result is Corona's website. But above it is a lot of Google placed info, first news articles, then tweets, then "helpful info", then "safety tips" about washing hands!

And THEN Corona beer's website...
 

JScott

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Futures down big again this morning, we might have an SPX open in the 2800s.
I've been avoiding posting this simply because I don't want anybody to make a bet investing decision based on it, but if you track the Friday performance of the stock market over the past year, you'll see that the vast majority of Fridays are down markets. My guess is that people have been weary of what could happen over a weekend during the trade war and brother political turmoils.

Using the same logic, I figured it was pretty much a certainty that the market would be down today. Nobody knows what news could come out this weekend, but it's more likely to be bad than good. And people don't want to spend the next two days stressing over what Monday could bring.

I think it will be interesting to see if any other companies lower guidance over the next few days for Q2. Walmart, Microsoft and Apple have already publicly warned about supply chain issues. If other companies start to do the same, we may not see much of a recovery for the first year of a future.

On the other hand, if there's no bad news some companies over the next couple days, I wouldn't be surprised to see a rally next week based on people feeling like the market is on sale.
 

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MJ DeMarco

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Nobody knows what news could come out this weekend, but it's more likely to be bad than good. And people don't want to spend the next two days stressing over what Monday could bring.
Yes, as such I'm guessing the market will sell-off in the final hours. It's recovered here a little bit, but once 3pm (EST) hits I'm guessing we test the lows. Could be quick profit for anyone who wants to be a 0 DTE put.
 

MJ DeMarco

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Could be quick profit for anyone who wants to be a 0 DTE put.
LOL, I just made 150% on my money in 45 minutes. Definitely a trader's market.
 
OP
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JohnBuffet

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Anyone else who is on the sideline (or wanting to buy more at discount prices) when do you guys plan to get in?
 

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I have had a lot sitting on the sidelines waiting to buy and ended up adding long positions in AMGN, SGEN, and VRTX since my assumption is they will rebound faster when the market comes back around than my retail, tech, financial stocks that I already held. I went to trade some puts today but wasn't going to be home all day and didn't want to hold over the weekend so I just bought the long stock and may trade more next week. The account overall has taken a pretty hefty haircut so hopefully a rebound coming as @JScott says even short term and I may take a little off and add back to cash reserves. Disney took my worst hit when they announced the closing of Tokyo theme park for 3+ weeks due to the virus.
 

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LOL, I just made 150% on my money in 45 minutes. Definitely a trader's market.
Yes, I rarely trade as for the most part I regard myself as a total novice, but for the past 10 days I have done incredibly well trading in and out of Biotech stocks.
Again, I am not disciplined enough to have a traders mentality, but fortunately haven't been burned yet.
 

MJ DeMarco

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Anyone else who is on the sideline (or wanting to buy more at discount prices) when do you guys plan to get in?
I went long into the close, expect a temporary relief rally next week. I had to sell my SPX positions which were up 2000, 3000% -- when VIX gets up into the 40's and beyond, it's hard to hold onto positions that have those kinds of gains locked in. When something you bought for $85 is now worth $2,500, how do you not? (There's photos of my SPX long positions on the INSIDE in the options thread.)

I trade in 2 accounts, once personal (dividends, paycheck pot stuff) and the other an speculative/options account which I fundamentally try to treat as a business... my personal account (which is usually mostly long dividend and interest bearing assets) took a beating. My trading/options account reached an all-time high -- that's the power of holding long SPX puts as insurance, if volatility blows up while the market tanks, 2000,4000% gains are possible. Those gains were far beyond my loses on the long bets. So now that account sits at an all-time high.

Another thing to note is the market traded after the close nearly 40 points higher (SPX) -- that means the smart money (institutional traders) were getting long (or short coverings) after retail hours -- they specifically waited until the market closed (where retail money trades) to pile in after. It's almost as if the smart money said, "Meh, let these fools sell off during normal hours, we'll buy after the close."
 

James Fend

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IDK we've just got our first death here with many more community cases every day. I wouldn't be surprised if we get another death tomorrow. Now the treasury yields are inverted again.

Even through the selloff, I think the sentiment for US investors is "Well it's not bad here but could be".

Now that sentiment is almost certainly "Things are getting pretty f*cky right now".

It seems like every trading day after terrible news is a major drop. Uncertainty is extremely high right now. IDK my gut just tells me it's going to get worse.

Worst case the market rallies a few percent and I lose a couple hundred dollars.

Never let a good crisis go to waste.
Good points.... why trading is hard. My thoughts are "things are getting f*cky right now." is already priced in. I believe that the next step "things ARE f*cky right now" is not however. Sounds very confusing lol.. but what I'm saying is I think the Trading Gods are 2 steps ahead of us mere mortals.

Anyways... I def get what you're saying and you could be extremely right!
 

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icemat

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Yes, as such I'm guessing the market will sell-off in the final hours. It's recovered here a little bit, but once 3pm (EST) hits I'm guessing we test the lows. Could be quick profit for anyone who wants to be a 0 DTE put.
Hey MJ,

Just curious why you chose DTE?

Thanks!
 

msufan

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Another thing to note is the market traded after the close nearly 40 points higher (SPX) -- that means the smart money (institutional traders) were getting long (or short coverings) after retail hours -- they specifically waited until the market closed (where retail money trades) to pile in after. It's almost as if the smart money said, "Meh, let these fools sell off during normal hours, we'll buy after the close."
What's a good place to track after-hours trading?
 

James Fend

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What do ya'll think about getting into a negatively leveraged ETF right now? Too late? Too risky?
Actually... taking a second look, although we both see further downside.. I think you might right in that there won't be a bounce (well any worth while) before the further pain to the bottom.
 

Kevin88660

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I think the corona virus impact on the stock market would present a great trading opportunity.

Uncertainty brings high volatility. We could have a whipsaw market that on a longer trend is going up or down or .....Who knows? My point is we are pretty sure that high volatility will stay. This means that simple intraday reversal trades such as buying the dip and taking profit for 1-2 days will generate enormous profit.

Buying dips trades work very well even in 2008 when overall market is down. (In fact buying dips is less lucrative in a calm market) It is counterintuitive but if you google online on the backtested results it works. The analogy is that if you buy a business asset that depreciates overtime but it generates far bigger cashflow daily to offset that depreciation (downtrend).
 

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MJ DeMarco

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I'm gonna read my tea leaves and say the SPY closes at 302.49 today (Mar 2 2020), or around there. It's currently 297.38 about 30m into trading. Just for the record... (and the potential LOLs).
 

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