Never has been such a panic attack in the stock market that has produced such a fast decrease in the stock price. Everything was sold off to raise cash. Every single asset class was sold off at whatever price, except the dollar. The US dollar is the single asset class rallied during the panic selloff. There is a worldwide shortage of dollar.
We have been warning about the risk in the stock market as we were approaching the business confidence turning point of Jan 18th, 2020. When the news of the coronavirus breaking out in China in January, the market discounted as a China problem and continued to make a higher high in February after a brief 3% selloff.
Over the weekend, Saudi Arabia engaged in the biggest oil price war with Russia that caused the oil price to drop more than 30% overnight. The futures market has responded with the DOW dropping more than 1000 points. If the market opens below the low of February tomorrow, the stock market selloff will intensify.
All three major indices lost more than 10% last week. On last Thursday we saw a 1190-point fall for the DOW. The pressure is high for the Fed to cut interest rates to rescue the stock market. This is the longest bull market in history, the investors have been conditioned to buy the dip and the Fed will take care of everything.
Since the January low, the market rallied as if the coronavius is nothing to be concerned about even with the ever increasing number of deaths and infected patients in China. Finally Apple came out warned the virus impacting the supply chain and sales in China. The reaction to Apple’s warning was muted, only
