Bubble of 2020 will burst by April 2021!All governments globally have been generous in providing decent amount of stimulus to their respective countries as compared to their GDP's. What makes me wonder is that even after such huge amount of stimulus many countries have shown flat GDP growth or economic contraction. What if these stimulus were not provided at first place? The economies and the global markets would die out of lack of liquidity. The stimulus just acted like a ventilator for dead global economies. The scary part is the recovery rally that we witnessed after 23rd March 2020 (bottom of crash) is actually a bubble as stock prices have increased whereas earnings of many stocks are still away from their previous highs resulting in crazy P/E ratios on index (i have never witnessed a PE ratio of 34 on Indian markets). This bubble shall burst as on ground in practical life consumer spending is less and many small businesses have shut down. Banks are at a huge risk of default (worst then 2007-2008). The interest rates are cheap and people are buying automobiles on huge loans out of their affordability. Things will start spiraling down to reality as central banks will increase interest rates soon and consumer spending through loans will also go down. Financially, next decade will be challenging. We will see another market crash by 12th April 2021 (max). The bull rally is short lived!
Jones
Dow Near Channel ResistanceWhat we are seeing today might be a smart distribution. Sell recommendation with a target of 24500
9.5 Year low of a secular bull market? This post is for my future reference only. The previous two secular bull markets made a 9.5 year low before continuing their secular bull markets. Currently this year with the consolidation we have seen, price could be setting up to make a low this November/December where after the low is in place, the current secular bull market would resume to make new highs.
Second, everyone is a bear or bearish. All we hear is how long this bull market has lasted. However, we did have a bear market in 2015. Even though price did not correct 20%, the Dow, SPX and NDX corrected with time and burned off their bullishness. On Google Trends this past February, "stock market crash" made the highest search rating since 2004. Google Trends showed how quick everyone becomes a bear. This is a hated secular bull market.
I could be wrong 100% with my thinking, but if we witness a sudden drop in prices similar to February of this year. Where price holds the Feb/April lows as support, I believe price would go on to new highs. Lets say price breaks the Feb/April lows in a shock and awe plunge. With everyone jumping on the bear market band wagon, with hardly any bulls left, I believe it would offer at least a break even long on a reactionary bounce, if this time is truly different.
Time will only tell. Best to everyone at Tradingview!
