Short Term Bounce For Stock Is Imminent 美股短期反弹在即

The US major stock market indexes made history today by dropping the most points in a single  day. The Dow had the second biggest single day percentage drop since the 1987 crash when it slump by over 22%. Today the Dow, S&P 500 and Nasdaq Composite - 2013 points (-7.79%), S&P500 -228 points (-7%) and -625 points (-7.29%) respectively. From historical highs, Dow, S&P 500 and Nasdaq Composite are down 5517 points (-19.33%), 1247 points (-19.07%) and 1887 points (-19.18%). The percentage drops from all time highs for these indexes almost reached -20%,  in which case a bear market can be declared. Luckily, right near this level, the market is ripe for a short term bounce. The reason for the short term bounce is sentiment has reached extreme bearish level.
The three sentiment presented below are all at extreme level and are ready to reverse:

1. Volatility Index ($VIX)---$VIX today reached 62, the most extreme level in 5 years and is not likely to sustain. It has already started to come down.

2. Put/Call Ratio ($CPC)---$CPC  today has reached 1.83 today and is the highest level in the last 5 years. Whenever $CPC is above 1.2, the S&P500 usually reverses up. Since 1.83 is much higher than 1.2, the reversal is much urgent.

3. The CNN Fear and Greed Index---The Fear and Greed Index has reached a score of 3 today, it is only second time at this low level in the last 3 years.

Besides sentiment is extreme bearish, President Trump met with his economic advisers on Monday afternoon to review a range of options that could help companies and consumers deal with expected economic fallout from the coronavirus. During a briefing in the White House after meeting, Trump said he is going to the Senate tomorrow and discuss implementing fiscal policies which Goldman Sachs has been expecting  including :

。Income tax cuts, payroll cut, policies to keep local governments spending
。Extend unemployment and under-employment insurance (as per GFC).
。Re-allow carry back of operating losses. Increase funding for small business lending. Direct aid or loans to airlines.

Separately, Goldman Sachs expects the Federal Reserve to cut rate in March and April and start asset purchase program. Market is expecting 0.5% in March and 0.5% in April.

The above mentioned fiscal  and monetary policies should also help the stock market.

Even though stars are line up for a market bounce, however since the market trend is strongly down, don't expect the bounce to last. Sell on rallies is still the best market strategy at the moment until the COVID-19 problem goes away.





今天，美国主要股市指数创造了历史，一天之内下跌点数最大。道琼斯指数跌幅为7.79%，是自1987年股灾下跌超过22％以来的第二大单日跌幅。今日道琼斯指数，标准普尔500指数和纳斯达克综合指数分别-2013点指数（-7.79％），标准普尔500指数-228点（-7％）和-625点（-7.29％）。道指，标普500和纳斯达克综合指数从历史高位分别下跌了5517点（-19.33％），1247点（-19.07％）和1887点（-19.18％）。这些指数从历史最高点下降的百分比几乎达到-20％，在这种情况下，可以宣布市场进入熊市。幸运的是，就在这个水平附近，市场进行短期反弹的时机已经成熟。短期反弹的原因是市场看跌情绪已达到极端而随时会反弹。下面介绍的三个指标都处于极端水平而随时会逆转：

1。波动率指数（$ VIX）--- $ VIX今天达到62，为五年来最高水平，不太可能持续。它已经开始下降。

2.看跌/看涨期权比率（$ CPC）---$ CPC今天已达到1.83，是过去5年中的最高水平。只要$ CPC高于1.2，S＆P500通常就会反转。由于1.83远高于1.2，因此逆转在即。

3。美国有线电视新闻网（CNN）的恐惧和贪婪指数---恐惧和贪婪指数今天达到了3分，这是过去三年中第二次达到这样低的水平，是小见的极端恐惧水平。

除了市场情绪季度悲观外，特朗普总统在周一下午与他的经济顾问会面，审查一系列可以帮助公司和消费者应对冠状病毒带来的预期经济影响的选择。会晤后在白宫举行的简报会上，特朗普表示，他明天将去参议院，讨论实施（高盛一直期望的）财政政策，包括：

。减税，减薪，保持地方政府支出的政策
。扩展失业和就业不足保险。
。重新允许结转经营亏损。增加用于小企业贷款的资金。向航空公司提供直接援助或贷款。

另外，高盛预计美联储将在3月和4月降息并启动资产购买计划。市场预计3月为0.5％，4月为0.5％。

上述有望出台的财政政策和货币政策也会利好股市。

即使一切都好像支持市场反弹，但是由于市场趋势仍是下跌，因此不要指望反弹会持续很久。 在COVID-19问题消失之前，逢高卖出仍是目前最好的市场策略。