New Minimum before the end of October 2020

May 1, 2020

During all the major financial crises the Dow Jones retraced by at least 50%. This financial crisis, although the Federal Reserve continues to print money, I don't think it will be any different. In 5 weeks more jobs have been lost than those recovered since 2009. 30 million jobless. The GDP fell by -4.8% and a collapse of about 15% is expected for the next quarter. The Chicago PMI has fallen to 35.4 and the ISM is also expected to fall. This would be the worst ever in history. During the 1974 economic crisis, the GDP collapsed by 4.8%, and the Dow Jones lost over 50%. The fact that stock indices, despite all the bad news, have kept me, makes me think of the same market behavior during the financial crisis of 2000 and the Great Recession 2007-2009. For this reason, I think the Dow Jones will have to drop by at least 50% from the highs of February 2020 before being able to start climbing again. I forecast it could happen before the end of October 2020. The excuse could be the "Second wave" of the Covid Pandemic. Almost all FANG shares are extremely overvalued at current values ​​and given that there is no visibility into the future of the economy in the short or medium term.

Consider that reading numbers is not entirely reliable. For example, In Q4 of 2008, the BEA estimated that the economy contracted by 6.3%; the 2018 revision shows that it was actually much worse, an 8.4% contraction.