Bull Trap or restarting a Bull run?

[Doc0]

The way growth curves work is the peak is reached when the second derivative changes sign. Once it changes sign the curve still grows just at a slower rate. If you're making 100K new cases a day, the next day you may make 99K then 98K etc. If you're making 100K cases a day under quarantine and the next day 99k and you lift the quarantine 5 days later you will be making > 101K and the second derivative will have changed signs again, so dequarantining COVID is not going to be risk off risk on proposition but a chop of local flareups. If the staff of Wendy's flares up, Wendy's goes back in quarantine for 2 or 3 weeks. Doesn't sound very V shaped to me. Also pandemics tend to take 2 years to reach herd immunity enough to reduce the R0 <1.

I dunno never saw 10M newly unemployed in 2 weeks before. Goldman predicts a -33% GDP never saw that before. The FED more than doubled it's balance sheet in a few weeks. These are all signs of monstrous instability and that will wreak true and lasting economic destruction. I doubt many biz's are going to survive 6 months of shut down due to debt load. Once we do reopen there will be no "pent up demand", because all the reserves will have been consumed. You're NOT going to Disney World which means Orlando stays in depression. Multiply that scenario by a few million. In the middle of a depression I'm not buying a new Ford truck, BUT given all the funny money inflation will likely happen on consumer staples, so no demand for Fords will cause Ford to be in depression with no jobs, and hungry children will cause bread to go to $50 bux a loaf. Ford's debt got down graded to junk today. Junk is freezing up which means the debt will sell for 10 cents on the dollar and Ford's likelihood of solvency comes into question. This is called stagflation no growth and high unemployment due to lack of demand and onerous debt and super high cost of living due to in this case MMT. The FED doesn't have a clue what they are doing.

I've been day trading the S&P using SPY on up days and SH on down days. I make about $300 a day but I put only a tiny tiny fraction of my money at risk, and I scale into the trades. Since trading is free now and I trade a Roth account, no drag due to trading costs and no taxes on profits. I may go long or short or flat several times a day if the market threatens to reverse. Beats watching that crap on CNBC

 

[Dtail]

The way growth curves work is the peak is reached when the second derivative changes sign. Once it changes sign the curve still grows just at a slower rate. If you're making 100K new cases a day, the next day you may make 99K then 98K etc. If you're making 100K cases a day under quarantine and the next day 99k and you lift the quarantine 5 days later you will be making > 101K and the second derivative will have changed signs again, so dequarantining COVID is not going to be risk off risk on proposition but a chop of local flareups. If the staff of Wendy's flares up, Wendy's goes back in quarantine for 2 or 3 weeks. Doesn't sound very V shaped to me. Also pandemics tend to take 2 years to reach herd immunity enough to reduce the R0 <1.

I dunno never saw 10M newly unemployed in 2 weeks before. Goldman predicts a -33% GDP never saw that before. The FED more than doubled it's balance sheet in a few weeks. These are all signs of monstrous instability and that will wreak true and lasting economic destruction. I doubt many biz's are going to survive 6 months of shut down due to debt load. Once we do reopen there will be no "pent up demand", because all the reserves will have been consumed. You're NOT going to Disney World which means Orlando stays in depression. Multiply that scenario by a few million. In the middle of a depression I'm not buying a new Ford truck, BUT given all the funny money inflation will likely happen on consumer staples, so no demand for Fords will cause Ford to be in depression with no jobs, and hungry children will cause bread to go to $50 bux a loaf. Ford's debt got down graded to junk today. Junk is freezing up which means the debt will sell for 10 cents on the dollar and Ford's likelihood of solvency comes into question. This is called stagflation no growth and high unemployment due to lack of demand and onerous debt and super high cost of living due to in this case MMT. The FED doesn't have a clue what they are doing.

I've been day trading the S&P using SPY on up days and SH on down days. I make about $300 a day but I put only a tiny tiny fraction of my money at risk, and I scale into the trades. Since trading is free now and I trade a Roth account, no drag due to trading costs and no taxes on profits. I may go long or short or flat several times a day if the market threatens to reverse. Beats watching that crap on CNBC

So DOC, with all the above statements, what is your low call on the SP500? above

 

[Helen]

This is a very unusual recession in that it is very intense, but we know that its cause will be gone in 18-24 mo (when a vaccine becomes widely available in the largest economies of the world).

I'm more concerned about the fallout from the stimulus. Our national debt is sky rocketing and each bailout gets bigger and bigger. We keep propping up a growing bubble. The pandemic seems like the short term problem, but there may be a much bigger problem looming in the background.

I should have paid better attention in my macro economics classes, I just have no guesses as to what the after effects will be, if any.

 

[RAE]

Yes, I think so. Once you have 10 million out of work, it's hard to place that genie back in the bottle. I predict several million will be added to those numbers in the next 6-12 months.

It took 10 yrs to recover from the Great Recession, so the confidence level is high that it will take just as long to see the light at the end of that tunnel.

Yes, and you have to remember that a lot of these people will have no jobs to go back to, once this is over. They are now estimating that about 1/3 of all restaurants/pubs will go out of business, along with a whole lot of travel-related jobs, and basically any jobs that involve larger groups of people getting together for anything (conventions, movie cinemas, music concerts, etc, etc). That is a tremendous amount of jobs that are just going to be lost, period. And all those people that are out of work will not be buying cars, will not be buying new homes, and on and on. Sure, they may eventually find new work, but it will take a long time. This is a big deal, folks, unlike any previous recession I have lived through.

 

[2177V]

People should look at what happened during the 2008 bear market. There were multiple stock market bull market rallies only to drop even further into negative territory. I read that S&P500 lost $5T so a $2T stimulus is a drop in the bucket since S&P500 does not include the mid caps, small caps, etc.

With millions of people not being productive, do people really think that a bull market rally will put these unemployed people back to work? Like Dr Fauci stated: The Virus will dictate the timeline.

 

[harley]

Yes, and you have to remember that a lot of these people will have no jobs to go back to, once this is over. They are now estimating that about 1/3 of all restaurants/pubs will go out of business,

I'm not doubting that there's going to be a lot of impact from this calamity. But with regard to restaurants, living in resort areas has shown me that there are always someone else willing to open a restaurant. Doesn't matter how many ones have failed at a certain location, there will be a new one there next year. So I think that yes, many restaurants will close, but new ones will open up, especially if the gov't makes loans easy to get. And as far as the workers go, they'll still be working at a restaurant, just under a different name. That's what I hope, anyway.

 

[WyomingLife]

Yes, and you have to remember that a lot of these people will have no jobs to go back to, once this is over. They are now estimating that about 1/3 of all restaurants/pubs will go out of business, along with a whole lot of travel-related jobs, and basically any jobs that involve larger groups of people getting together for anything (conventions, movie cinemas, music concerts, etc, etc). That is a tremendous amount of jobs that are just going to be lost, period. And all those people that are out of work will not be buying cars, will not be buying new homes, and on and on. Sure, they may eventually find new work, but it will take a long time. This is a big deal, folks, unlike any previous recession I have lived through.

Again, you are all dear and smart folks. I'm fortunate to be here. I'm also not Nostradamus version 2.0. And as stated previously, if I could tell the future, I'd be in Vegas tomorrow (though since air travel is impaired, I might have to walk there). And everybody's situation is different -- are you age 35, 58, 68, whatever? If I had retired yesterday with a 5% SWR, I might be sweating. YMMV.

But I just don't accept the negativity. When one is in the maelstrom, it always feels like this. Had this board existed on December 8, 1941, I wonder what the posts would have been. They might have been: (1) "US Pacific Fleet disabled, we're done for"; and (2) "a foreign invasion can be anticipated on the western coast of the United States." And those were common sentiments then, according to my parents, now deceased. They dimmed the lights in San Francisco for fear of an invasion.

If this Pandemic terrible? Yes. Is every death horrific? Yes. Have the United States' many faults now been laid bare such that we no longer look like the so-called developed nation we previously deemed ourselves to be? Yes.

But investing is about one's views about the future. For an insightful discussion of the appearance of markets in this context set against human civilization, see Harari, Y. "Sapiens: A Brief History of Humankind." In essence, stock market investments are about one's view of the future.

And I'm bullish about the future of humanity.

Next up for humanity: (1) artificial intelligence; (2) quantum computing; (3) advancements in health care; (4) the 2021 launch of the James Webb Space Telescope (JWST), which will replace the Hubble Space Telescope; and (5) a literal infinite number of other technological advancements that we mere mortals cannot even begin to contemplate tonight. The JWST, for example, is going to peer back into the very beginnings of the Universe. How cool is that? It will likely lead to advancements in quantum-related sciences, too, to the benefit of humanity.

So I'm happily continuing to invest.

I hope everybody is safe, healthy and following the advice of health experts. It's a serious situation, for sure. But I'm still investing.

 

[atxk]

Long recovery

Took 25 years for stocks to recover from the Great Depression . I don’t know when down will end. Pretty confidant that we are at the beginning of down as the knock on effects are rolling out over the next quarter at least. Best thing is that it is an election year and money is going to be spent to moderate the drops but $1500 is one months rent at best.

15% unemployment and that’s just the beginning.

 

[atxk]

Slow back to work

It could go either way and it all depends on how quickly people can start going back to work. If people are back to work by August then I think we have roughly seen the bottom (might retest it or go a little lower).

If people are stuck in quarantine for the rest of the year then look out below.

Given our current leadership I don’t expect it to be under control anytime soon. Too many back sliders. Ie Texas letting church’s hold services. Stupid in every way.

Won’t be under control until massive tracking and tracing is being done and all states have low levels of infection that stay under control. South Korea is at this point and still has new cases daily and new clusters.

Won’t be under control fully until a vaccine is widely available or 50% have had it. If we get to 50% 1 or 2 million will have died. Our leadership has been very slow to react, incompetent when they did and petty when possible.

Worst time to have bad leadership.

 

[aja8888]

Worst time to have bad leadership.

Yes, everyone from the state level on up has no real experience in something like this. But, then again, if we had other leadership, how do we know they (collectively) would handle this "better"?

OH,BTW, here in The Woodlands, Texas, all churches are not holding services, except online.

 

[SlowlySaving]

Bear trap!
I see the S&P bottoming out at about 1800-2000 before it's all over.
Will be interesting to see.

*turns off crystal ball

 

[BeachOrCity]

Again, you are all dear and smart folks. I'm fortunate to be here. I'm also not Nostradamus version 2.0. And as stated previously, if I could tell the future, I'd be in Vegas tomorrow (though since air travel is impaired, I might have to walk there). And everybody's situation is different -- are you age 35, 58, 68, whatever? If I had retired yesterday with a 5% SWR, I might be sweating. YMMV.

But I just don't accept the negativity. When one is in the maelstrom, it always feels like this. Had this board existed on December 8, 1941, I wonder what the posts would have been. They might have been: (1) "US Pacific Fleet disabled, we're done for"; and (2) "a foreign invasion can be anticipated on the western coast of the United States." And those were common sentiments then, according to my parents, now deceased. They dimmed the lights in San Francisco for fear of an invasion.

If this Pandemic terrible? Yes. Is every death horrific? Yes. Have the United States' many faults now been laid bare such that we no longer look like the so-called developed nation we previously deemed ourselves to be? Yes.

But investing is about one's views about the future. For an insightful discussion of the appearance of markets in this context set against human civilization, see Harari, Y. "Sapiens: A Brief History of Humankind." In essence, stock market investments are about one's view of the future.

And I'm bullish about the future of humanity.

Next up for humanity: (1) artificial intelligence; (2) quantum computing; (3) advancements in health care; (4) the 2021 launch of the James Webb Space Telescope (JWST), which will replace the Hubble Space Telescope; and (5) a literal infinite number of other technological advancements that we mere mortals cannot even begin to contemplate tonight. The JWST, for example, is going to peer back into the very beginnings of the Universe. How cool is that? It will likely lead to advancements in quantum-related sciences, too, to the benefit of humanity.

So I'm happily continuing to invest.

I hope everybody is safe, healthy and following the advice of health experts. It's a serious situation, for sure. But I'm still investing.

I too am bullish LONG TERM.........BUT....

We have a LOT of bad stuff that will happen between now and that bullish future.

IMHO, best to take off the table, and buy back in lower. Have patience, market will go down before it goes up again.

As long as one has the confidence to jump back in, there is the ability to improve ones financial position vs just holding on.

 

[coach02116]

"IMHO, best to take off the table, and buy back in lower. Have patience, market will go down before it goes up again."

Bulls eye!

 

[sgstaley]

It is both a new bull and we will retest.

Which is good, I need to keep nibbling on the lower prices.

I agree 100%. I am "nibbling" at these lower prices also.

 

[kjpliny]

I predict social unrest, war and famine within 18 months. The world will slowly fall apart due to excess debt. A vaccine will be too late to undo the damage.

I know, I know...dark.

 

[wallygator69]

ugh

I predict social unrest, war and famine within 18 months. The world will slowly fall apart due to excess debt. A vaccine will be too late to undo the damage.

I know, I know...dark.

 

[brewer12345]

I predict social unrest, war and famine within 18 months. The world will slowly fall apart due to excess debt. A vaccine will be too late to undo the damage.

I know, I know...dark.

So we should be swapping recipes for long pig?

 

[kjpliny]

So we should be swapping recipes for long pig?

I'm not sure any recipe for that menu item would help. The imagery...

 

[brewer12345]

I'm not sure any recipe for that menu item would help. The imagery...

Cut it into anonymous cubes and I am sure it tastes like chicken.

 

[Mountain skier]

If the US flattens the curve April 16 as projected market may start an overall improvement. The improvement may mean something like 3 days up, 2 down, or 4 days up 2 down; or we may have a few weeks of up, then one week down.

Who know though? No one.

 

[Dtail]

If the US flattens the curve April 16 as projected market may start an overall improvement. The improvement may mean something like 3 days up, 2 down, or 4 days up 2 down; or we may have a few weeks of up, then one week down.

Who know though? No one.

But that is the continuing question.
Will the market respond more so to the virus impact or the resulting economic impact?

 

[Lawrencewendall]

Here here!

No it's hear, hear.

 

[REWahoo]

No it's hear, hear.

That's a mute point.

 

[Clone]

That's a mute point.

I can foresee the future- we are on the brink of social breakdown, civil war, and swapping recipes for cannibalism. Yet, we are arguing over the proper use of there or their, the royal we, and proper use of it's or its...

 

[PatrickA5]

You bring up a point that I think is crucial. And that is consumer behavior and sentiment when we get through the first wave of this deadly virus. Yes, there will be some pent-up demand, no doubt. But how many people are jumping on flights? How many going to concerts, to the movies, to packed theme parks? How about business conferences in convention centers? Family weddings, parties, even funerals. Anything that normally is an intimate affair with hand shaking, back slapping, high fiving and hugging? It's going to be a rough 6 months or so. I do believe in this nation. 1000%!! But we're in the soup for awhile until we figure out how to live in this new normal.

I don't plan on doing any of that until there's a vaccine!